STUDIO CITY HOLDING CORP, 424A, 1999-06-03

STUDIO CITY HOLDING CORP
424A, 1999-06-03
MOTION PICTURE & VIDEO TAPE PRODUCTION

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PROSPECTUS

STUDIO CITY HOLDING CORPORATION

27,482,001 Shares of Common Stock

3,825,834 Shares of Class B Preferred Stock

This securities of Studio City Holding Corporation, a New York corporation
(together with its subsidiaries, the "Company") to which this Prospectus relates
are: (i) 27,482,001 shares (the "Shares") of Common Stock, $.002 par value (the
"Common Stock) and (ii) 3,825,834 shares of Class B Preferred Stock, $.0001 par
value per share (the "Class B Preferred Stock"), all of which securities are to
be offered and sold from time to time by and on behalf of the holders of such
securities, referred to herein as "Selling Security Holders." The names of such
Selling Security Holders and their respective holdings are set forth in Appendix
A under "Selling Security Holders."

The securities of the Company to which this Prospectus relates were issued
to more than 300 persons without compliance with the registration provisions of
the Securities Act of 1933 in reliance upon exemptions therefrom the Company
believed were available. The securities were issued without registration in
reliance upon various "non-public" or "private" offering exemptions the Company
believed available at the time of issuance, based upon the following factors:
(i) the issuance of the securities was to a limited number of persons; (ii) such
persons were given access to all available financial and other information;
(iii) such persons were sophisticated and experienced investors; (iv) such
persons represented that they were acquiring the securities for investment and
not with a view to distribution; and (v) the certificates evidencing the
securities bore appropriate restrictive transfer legends.

Since the exemptions from registration relied upon by the Company may not
have been available, by virtue of the relatively large number of persons
involved, the Company is effecting registration of all outstanding securities in
the Registration Statement of which this Prospectus is a part, so that the
holders of the securities, most of whom acquired their securities more than two
years ago, may publicly offer and sell their securities freely and without
limitation (unless they are "affiliates" of the Company). None of the proceeds
from the sale of the securities by the Selling Security Holders pursuant to this
Prospectus will be received by the Company. The securities may be offered by the
Selling Security Holders from time to time in transactions for their own
accounts in the over-the-counter market in negotiated transactions, at
negotiated prices, in that there is no established trading market for such
securities. The Selling Security Holders may effect such transactions by selling
to or through broker-dealers, and such broker-dealers may receive compensation
in the form of discounts, concessions or commissions from the Selling Security
Holders or the purchasers of the securities for whom/which such broker-dealers
may act as agent or to whom/which they sell as principal, or both (which
compensation as to a particular broker-dealer might be in excess of customary
commissions).

The Selling Security Holders and any broker-dealers that act in connection
with the sale of the securities may be deemed to be "underwriters" within the
meaning of Section 2(l1) of the Securities Act and any commissions received by
them and any profit on the resale of the securities as principal might be deemed
to be underwriting compensation under the Securities Act.

The holders of Class B Preferred Stock have no voting rights except as
required by law. The holders of Class B Preferred Stock are entitled to receive,
out of funds legally available therefor, cumulative preferential dividends at
the rate of 12% per annum per share, based on earnings. Shares of Class B
Preferred Stock may be converted into shares of Common Stock on the basis of one
share of Class B Preferred Stock for ten shares of Common Stock. See
"Description of Securities."

There is currently no public trading market for any securities of the
Company and there can be no assurance that any such market will develop in the
future.

THESE SECURITIES ARE SUBJECT TO A HIGH DEGREE OF RISK.
POTENTIAL PURCHASERS SHOULD CAREFULLY CONSIDER THE MATTERS SET FORTH UNDER "RISK
FACTORS." COMMENCING ON PAGE 4 HEREOF.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

The expenses of the offering, including registration fees, and printing,
legal and accounting fees, estimated at $223,520, will be borne by the Company
from its general funds; none of such expenses will be borne by the Selling
Security Holders.

The date of this Prospectus is May 26, 1999.
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TABLE OF CONTENTS

STUDIO CITY HOLDING CORPORATION

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.......................................... 2
The Offering................................................ 2
The Company................................................. 2
Risk Factors................................................ 3
Use of Proceeds............................................. 6
Determination of Offering Price............................. 7
Selling Security Holders.................................... 7
Plan of Distribution/Business............................... 7
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 13
Management.................................................. 15
Certain Transactions........................................ 17
Principal Stockholders...................................... 18
Description of Securities................................... 19
Selling Security Holders.................................... 20
Shares Eligible for Future Sale............................. 20
Legal Matters............................................... 20
Experts..................................................... 20
Independent Auditor's Report................................ F-2
Consolidated Balance Sheets................................. F-3
Consolidated Financial Statements........................... F-4
Selling Security Holders.................................... Appendix A
Common Stock (Selling Securityholder)....................... Appendix A-1
Class B Preferred Stock..................................... Appendix A-2
</TABLE>
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PROSPECTUS SUMMARY

The following is a brief summary of the information contained in this
Prospectus. This Prospectus Summary is not intended to be complete and is
qualified in its entirety by the more detailed information contained elsewhere
in this Prospectus. Unless otherwise defined herein, capitalized terms used in
this Prospectus Summary have the respective meanings assigned to them elsewhere
in this Prospectus. Unless the context otherwise requires, the "Company" refers
to Studio City Holding Corporation and its predecessors and subsidiaries.
Potential investors should read carefully this Prospectus in its entirety.

THE OFFERING

The securities of Studio City Holding Corporation, a New York corporation
(together with its subsidiaries, the "Company") to which this Prospectus relates
are: (i) 27,482,001 shares (the "Shares") of Common Stock, $.002 par value (the
"Common Stock") and (ii) 3,825834 shares of Class B Preferred Stock, $.0001 par
value per share (the "Class B Preferred Stock"), all of which are to be offered
and sold from time to time by and on behalf of the holders of such securities,
referred to herein as "Selling Security Holders." The names of such Selling
Security Holders and their respective holdings are set forth in Appendix A under
"Selling Security Holders." None of the proceeds from the sale of the securities
by the Selling Security Holders pursuant to this Prospectus will be received by
the Company. The securities may be offered by the Selling Security Holders from
time to time in transactions for their own accounts in negotiated transactions,
at negotiated prices. The Selling Security Holders may effect such transactions
by selling to or through broker-dealers, and such broker-dealers may receive
compensation in the form of discounts, concessions or commissions from the
Selling Security Holders or the purchasers of securities for whom/which such
broker-dealers may act as agent or to whom/which they sell as principal, or both
(which compensation as to a particular broker-dealer might be in excess of
customary commissions).

There is currently no public trading market for any securities of the
Company and there can be no assurance that any such market will develop in the
future.

As of March 31, 1999, there were issued and outstanding 31,282,001 shares
of Common Stock (including 3,800,000 treasury shares), 10,000,000 shares of
Class A Preferred Stock and 3,825,834 shares of Class B Preferred Stock. None of
the securities covered by this Prospectus will be offered by the Company and
there will continue to be 31,282,001 shares of Common Stock, 10,000,000 shares
of Class A Preferred Stock and 3,825,834 shares of Class B Preferred Stock
issued and outstanding after giving effect to the offering by the Selling
Security Holders. Also outstanding are warrants to purchase 500,000 shares of
Common Stock at $3.00 per share until December 31, 1999 and warrants to purchase
5,000,000 shares of Common Stock at $1.00 per share until February 16, 2003.

THE COMPANY

The Company is a development stage media holding company specializing in
the creation of "entertainment franchises" and the development of its fifteen
wholly-owned or majority-owned media subsidiaries. An "entertainment franchise"
is an intellectual property which can create substantial revenues from at least
five different and non-related sources of revenue creation; it is purposefully
created and designed to be recognized as a "brand name" with multiple areas of
revenue generators. For example, an intellectual property which is an
entertainment franchise could create revenues from (1) publishing, (2) motion
picture distribution, (3) television broadcast, (4) home video sales, (5) audio
product sales, (6) licensing, (7) spinoff product sales, (8) merchandising, (9)
ancillary products and (10) segmented usage. The Company, through its
subsidiaries, owns a portfolio of intellectual properties and production rights.
The Company plans to provide its operating subsidiaries with financing and
management services, including accounting, planning, budgeting and human
resources management. The Company's subsidiaries are media companies which
intend to produce products in the motion picture, television, publishing and
other industries.

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timely manner, on commercially reasonable terms, or at all. Since the Company is
in the development stage, it is subject to all the risks inherent in undertaking
a new business venture. See "Risk Factors."

Each of its subsidiaries also is in the development stage with a limited or
no operating history. Consequently, the subsidiaries have generated little or no
revenues as of the date hereof. In addition, there can be no assurance that any
of the subsidiaries will achieve significant operations, generate significant
revenues or attain profitability.

The Company was incorporated in New York under the name "CVT Corp. of
America" ("CVT") in March 1984. From 1984 to 1993, CVT was engaged in limited
sales, manufacturing and marketing operations of continuous variable speed
transmissions. CVT had a public offering of securities registered with the
Securities and Exchange Commission in 1984. Unable to finance the research and
development necessary to continue operations, CVT ceased operations in 1993. On
June 28, 1996, CVT changed its name to "Studio City Holding Corporation" and,
effective July 1, 1996, merged with Studio City Incorporated Holding, a Florida
corporation ("Studio City-Florida"), a development stage media holding company.

The Company's principal executive office is located at 14400 Southwest 46th
Court, Ocala, Florida 34484, where its telephone number is (352) 347-3947. The
Company's corporate offices are located in care of Dante S. Alberi, Esq., 153
Stevens Avenue, Suite 7, Mount Vernon, New York 10550, where the telephone
number is (914)668-5020.

RISK FACTORS

An investment in the securities offered hereby is highly speculative in
nature, involves a high degree of risk and should be made only by investors who
can afford the loss of their entire investment. In addition to the factors set
forth elsewhere in this Prospectus, prospective investors should give careful
consideration to the following risk factors in evaluating the Company and its
business before purchasing any securities offered hereby.

Substantial Operating Losses; No Assurance of Success. During the years
ended December 31, 1997 and 1998, the Company had net losses of $572,506 and
$523,483, respectively. At March 31, 1999, the Company had cumulative net loss
since inception of $2,445,552. The cumulative deficits reflect the cost of
developmental and other start-up activities, without significant offsetting
revenues. The Company's business is capital intensive. The Company expects to
continue to incur significant losses in the future. The Company's proposed
operations are subject to numerous risks associated with establishing any new
business, including unforeseeable expenses, delays and complications, as well as
specific risks of the highly competitive entertainment industry. There can be no
assurance that the Company's business plan will be successful, that it will be
able to market any product on a commercial scale, that it will achieve or
sustain profitable operations or that it will be able to remain in business. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business."

Possible Contingent Liability. Effective July 1, 1996, Studio City-Florida
merged with and into the Company, pursuant to an Agreement and Plan of Merger
dated October 12, 1995 (the "Plan of Merger"), approved by the vote of the
shareholders of such constituent corporations. Pursuant to the Plan of Merger
(i) 100,000,000 shares of Common Stock of Studio City-Florida held by Larry D.
Faw, the President and Chairman of the Board of the Company, were converted into
10,000,000 shares of the Company's Class A Preferred Stock, (ii) 10,000,000
shares of Common Stock of Studio City-Florida held by Mr. Faw were converted
into 1,000,000 shares of the Company's Class B Preferred Stock, (iii) 1,000,000
shares of the Class B Preferred Stock of Studio City-Florida held by Mr. Faw
were converted into 1,000,000 shares of Class B Preferred Stock of the Company,
(iv) warrants to purchase 5,000,000 shares of Common Stock of

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Studio City-Florida were converted into Warrants to purchase 5,000,000 shares of
the Company's Common Stock, at $1.00 per share, and (v) each of the remaining
issued and outstanding shares of Common Stock of Studio City-Florida were
converted into one share of the Company's Common Stock. These securities were
issued without compliance with the registration requirements of the federal
securities laws or any state securities laws, in reliance upon exemptions
therefrom the Company believed to be available therefor. The securities were
issued without registration in reliance upon various "non-public" or "private"
offering exemptions the Company believed available at the time of issuance,
based upon the following factors: (i) the issuance of the securities was to a
limited number of persons; (ii) such persons were given access to all available
financial and other information; (iii) such persons were sophisticated and
experienced investors; (iv) such persons represented that they were acquiring
the securities for investment and not with a view to distribution; and (v) the
certificates evidencing the securities bore appropriate restrictive transfer
legends. However, the Company subsequently learned that the exemptions relied
upon may not have been available, because of the more than 300 persons involved,
and, consequently, the Company may be contingently liable up to $1,003,100, plus
interest. See Note 20 to Consolidated Financial Statements. The registration
statement of which this Prospectus is a part does not affect the Company's
contingent liability.

Need for Additional Financing; Working Capital Deficit. The entertainment
industry generally requires constant infusions of new and substantial capital to
finance projects. There can be no assurance that such funds will be available to
the Company or, if available, that the funds can be obtained on terms favorable
to the Company. The Company's ability to operate as a going concern is
contingent upon such infusions of capital or the ability of the Company to
attract financing for its projects from other sources. Any equity financings
could result in dilution to the Company's then existing stockholders. At
September 30, 1998, the Company had a working capital deficit of $1,897,084
(unaudited). The Company's business plan for the next fiscal year contemplates
the need for more than $900,000, exclusive of the demand obligation to Mr. Faw,
see "Business -- Faw Purchase Agreement," with no known sources of liquidity. To
the extent that less than $900,000 is available, the Company's business plan
will have to be curtailed, which would have a material adverse effect upon the
Company's financial position and business. See "Management's Discussion and
Analysis of Financial Condition and Results of Operation." The Company's failure
to pay its demand obligation to Mr. Faw, or to other creditors, could result in
its bankruptcy. There is no repayment schedule; Mr. Faw has indicated that he
has no present plan to demand payment.

Valuation Uncertainty. In 1993, Studio City-Florida acquired various
intellectual properties from Mr. Faw in exchange for a demand promissory note
for $1,554,027 and certain securities. The purchase price for the properties,
which had an estimated value of $7,226,000, was determined by Mr. Faw, without
arm's length negotiations, by reference to industry standards as detailed in the
National Labor Relations Board's Collective Bargaining Agreement between the
Alliance of Motion Picture and Television Producers and the Writers Guild of
America, which reflects the minimum replacement costs and pass through financial
obligations to industry-wide motion picture and television producers and
purchasers of intellectual properties. The industry standards referred to in
that agreement may have no relationship to commercial, economic or fair market
value of the intangible assets. For financial reporting purposes, in accordance
with generally accepted accounting principles, the recorded amount of the
intellectual properties was zero, by virtue of the lack of evidence of
historical predecessor cost. At December 31, 1998 and March 31, 1999, the total
obligation to Mr. Faw was $1,929,096 and $1,949,860, respectively, in principal
and interest.

Risk of Low-Priced Stocks. Currently, the Company's Common Stock is
considered a "penny stock" for purposes of the Exchange Act. The penny stock
regulations, set forth in Rules 15g-1 through 15g-9 promulgated under the
Exchange Act, impose sales practice and disclosure requirements on certain
brokers and dealers who engage in certain transactions involving penny stock.

Under the penny stock regulations, unless the broker or dealer or the
transaction is otherwise exempt, a broker or dealer selling penny stock to
anyone other than an established customer or "accredited investor" (generally,
an individual with net worth in excess of $ 1,000,000 or annual income exceeding
$200,000, or $300,000 together with his or her spouse) must make a special
suitability determination for the purchaser and must receive the purchaser's
written consent to the transaction prior to sale. In addition, the penny stock
regulations require the broker or dealer to deliver, prior to any transaction
involving a penny stock, a disclosure schedule prepared by the Securities and
Exchange Commission (the "Commission") relating to the penny

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stock market. A broker or dealer is also required to disclose commissions
payable to the broker or dealer and the registered representative and current
quotations for the securities. In addition, a broker or dealer is required to
send monthly statements disclosing recent price information with respect to the
penny stock held in a customer's account and information with respect to the
limited market in penny stocks.

The additional sales practice and disclosure requirements imposed by the
penny stock regulations could impede the sale of the Company's Common Stock in
the secondary market. In addition, the market liquidity for the Company's
securities may be severely adversely affected, with concomitant adverse effects
on the price of the Company's securities.

Entertainment Industry. The entertainment industry is highly competitive
and involves a considerable degree of risk. Each entertainment project is an
individual artistic work, and its commercial success is primarily determined by
audience reaction, which is unpredictable. Accordingly, there can be no
assurance as to the financial success of any motion picture or entertainment
project. Furthermore, there can be no assurance that the audiences for motion
pictures or entertainment projects will remain constant. The motion picture and
entertainment industries are extremely competitive. The Company competes with
many other motion picture and entertainment companies, including the "major"
motion picture studios, which are larger and have financial resources which are
substantially greater than those of the Company. The major motion picture
studios are typically large, diversified entertainment concerns or subsidiaries
of diversified corporations which have strong relationships with creative
talent, exhibitors and others involved in the entertainment industry, and whose
non-motion picture operations often provide stable sources of earnings that
offset variations in the financial performance of their motion picture
operations.

Reliance Upon Management. The business of the Company will be managed by
Larry D. Faw who shall serve as the Company's President and Chairman of the
Board of Directors, as well as the executive producer and the director of its
productions. The loss of Mr. Faw, particularly in the early stages of the
Company's operations, would materially adversely affect the Company. The Company
has no key man insurance in effect for Mr. Faw. See "Management."

Competition. The Company's entertainment projects will be competing with
other motion pictures or films and projects attempting to gain distribution. The
major studios and many independents have established relationships with
successful filmmakers and are able to obtain distribution agreements with
comparatively favorable terms. Many of these companies have the ability to offer
potential distributors and promoters a number of films or projects which may be
more attractive than a single film or project. Although some industry practices
have enabled smaller independents with viable products to find distribution for
a single reasonably budgeted film, the Company will not possess many of the
advantages in distribution which are enjoyed by the larger well established film
producers. Once the Company has contracted with a distributor, its motion
pictures and projects will be competing with other products for exhibition time
in the various markets. There is no assurance that the Company's products will
be able to compete successfully under these circumstances. See
"Business-Competition."

No Trademark and Limited Copyright Protection. The Company's trademarks
and rights to characters are the principal assets of the Company. The Company
presently has no trademarks and limited copyrights, but plans to file
applications for trademark and copyright protection for each of its produced
titles and featured characters. There can be no assurance that any such
application, when filed, will be approved, or that the Company will have the
financial and other resources necessary to enforce its proprietary rights
against infringement by others. The inability of the Company to obtain adequate
protection of or to enforce its proprietary rights could have a material adverse
effect on the Company. It is the Company's policy not to file for copyright
protection until production, in order to protect what it considers its trade
secrets.

Effect of Outstanding Warrants and Convertible Securities. As of the date
of this Prospectus, the Company has outstanding warrants to purchase 5,000,000
shares of Common Stock at $1.00 per share, warrants to purchase 500,000 shares
of Common Stock at $3.00 per share, and 3,825,834 shares of Class B Preferred
Stock convertible into 38,258,340 shares of Common Stock. As long as such
warrants and convertible securities remain unexercised or are not converted, as
the case may be, the terms under which the Company could obtain additional
capital may be adversely affected.

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Control by Present Stockholders. The Company's President and Chairman of
the Board of Directors, Larry Faw, beneficially owns 10,000,000 shares of Class
A Preferred Stock and 10,196,277 shares of Common Stock representing
approximately 83.1% of the total voting power of the Company. As a result, he
will be able to continue to influence the election of the Company's directors
and otherwise control the Company's management and operations. See "Principal
Stockholders" and "Description of Securities."

Collective Bargaining Agreements. A substantial number of the artists,
talent and crafts-people involved in the entertainment industry are represented
by trade unions with industry-wide collective bargaining agreements. An
industry-wide strike causing a prolonged disruption in project production could
have a material adverse effect on the Company's business.

No Distribution Agreement. The Company currently does not have a
pre-production distribution agreement in place for any of its products and can
not offer any assurance to investors that a distribution agreement can be
obtained or if obtained that such agreement will be profitable. It is difficult
for a small independent producer to market a product to the networks or for
independent syndication. The success of such marketing effort is dependent upon
many factors including (a) the quality of the product, (b) the fit of the
product to the network's or syndicate's other program mix and selection
criteria, (c) perceived public trends, (d) the reputation of the producers, and
(e) in part the individual producers interpersonal relationships within the
industry. Although management believes favorable distribution agreements can be
obtained, the lack of a pre-production agreement substantially increases the
risk to the investors.

Determination of Offering Price; Market Illiquidity. There is currently no
public trading market for the securities and there can be no assurance that one
will develop in the future. The price at which these securities may be offered
to the public by Selling Security Holders may be greater than the market price
for the securities following the offering. Due to the lack of earnings history
of the Company and the absence of a reasonable expectation of dividends in the
near future, there can be no assurance of an active and liquid trading market
for the Common Stock or any other securities of the Company developing in the
future. A purchaser of securities in this offering may face difficulties in
finding a purchaser for his or her securities and may expect to receive a lower
price for such securities than otherwise may be the case. See "Determination of
Offering Price." The offer and sale of substantial amounts of Common Stock in
the public market could adversely affect the market price prevailing from time
to time.

No Dividends. The Company has not paid any cash dividends on any of its
shares of Class A Preferred Stock, Class B Preferred Stock or Common Stock and
does not presently intend to pay cash in the foreseeable future. Rather, any
future earnings will be used to satisfy the considerable financing requirements
of the Company. However, to the extent that earnings permit, the Company will
pay a dividend of 12% per annum on its shares of Class B Preferred Stock. It is
not likely that any cash dividends will be paid in the foreseeable future.

Forward-Looking Statements. Certain statements throughout this Prospectus
regarding the Company's financial position, business strategy and the plans and
objectives of Company management for future operations, are forward-looking
statements rather than historical or current facts. When used in this
Prospectus, words such as "anticipate," "believe," "estimate," "expect,"
"intend" and similar expressions, as they relate to the Company or its
management, identify forward-looking statements. Such forward-looking statements
are based on the beliefs of the Company's management as well as assumptions made
by and information currently available to the Company's management. Such
statements are inherently uncertain, and there can be no assurance that the
underlying assumptions will prove to be valid. Actual results could differ
materially from those contemplated by the forward-looking statements as a result
of certain factors, such as those disclosed under "Risk Factors," including but
not limited to the Company's lack of operating history, competitive factors, and
general economic conditions. Such statements reflect the current views of the
Company with respect to future events and are subject to these and other risks,
uncertainties and assumptions relating to the operations, results of operations,
growth strategy and liquidity of the Company. All subsequent written and oral
forward-looking statements attributable to the Company or persons acting on its
behalf are expressly qualified in their entirety by this paragraph.

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USE OF PROCEEDS

The Company will not receive any proceeds upon the sale of any securities
by the Selling Security Holders. The net proceeds to the Company with respect to
the exercise of any of the Warrants will be used for general corporate purposes
and working capital, in order to pay administrative costs of operating the
Company, including salaries, rent, legal and accounting fees and expenses.
However, there can be no assurance that any of the Warrants will be exercised
and due to the lack of market for the Common Stock the Company does not expect
any of the Warrants to be exercised at this time. The expenses of this offering,
estimated at $223,520, will be paid solely by the Company.

DETERMINATION OF OFFERING PRICE

There is currently no public market for the shares of Common Stock or Class
B Preferred Stock. The price at which these shares may be offered to the public
by the Selling Security Holders may be greater than the market price for the
Common Stock and Class B Preferred Stock following the offering. Due to the lack
of earnings history of the Company and the absence of a reasonable expectation
or assurance of dividends in the near future, among other factors, there can be
no assurance of an active and liquid market for the Common Stock and Class B
Preferred Stock developing in the future. A purchaser of securities in this
offering may face difficulties in finding a purchaser for his or her securities
and may expect to receive a lower price for such securities than otherwise may
be the case.

SELLING SECURITY HOLDERS

The Shares and Class B Preferred Stock are to be offered and sold from time
to time by and on behalf of the Selling Security Holders named in Appendix A, in
the manner and under the circumstances described on the cover page of this
Prospectus and under "The Offering" and "Plan of Distribution."

Appendix A to this Prospectus sets forth for each Selling Security Holder
the number of Shares and Class B Preferred Stock beneficially owned prior to the
offering and the number to be offered and sold; assuming that each Selling
Security Holder sells all his or her securities, the number and percentage of
shares of Common Stock and Class B Preferred Stock to be owned by each after
completion of the offering will be zero. Except as described, there are no
material relationships between any of the Selling Security Holders and the
Company or any of its predecessors or affiliates, nor have any such material
relationships existed within the past three years.

PLAN OF DISTRIBUTION

The Shares and Class B Preferred Stock may be offered by the Selling
Security Holders from time to time in transactions for their own account in
negotiated transactions, at negotiated prices, in that there is no established
trading market for such securities. The Selling Security Holders may effect the
sale of the Shares and Class B Preferred Stock by selling the securities to or
through broker-dealers, and such broker-dealers may receive compensation in the
form of discounts, concessions or commissions from the Selling Security Holders
or the purchasers for whom/which such broker-dealers may act as agent or to
whom/which they sell as principal, or both (which compensation as to a
particular broker-dealer might be in excess of customary commissions). The
Selling Security Holders and any broker-dealers that act in connection with the
sale of the securities may be deemed to be "underwriters" within the meaning of
Section 2(l1) of the Securities Act and any commissions received by them and any
profit on the resale of the securities as principal might be deemed to be
underwriting compensation under the Securities Act.

There is no established public trading market for any securities of the
Company and there is no assurance that any such market will develop in the
future.

BUSINESS

GENERAL

The Company is a development stage media holding company specializing in
the creation of "entertainment franchises" and the development of its fifteen
media subsidiaries. The Company, through its subsidiaries, owns a portfolio of
intellectual properties and production rights. The properties include stories
and titles, some of which are copyrighted and others of which are works in
progress or under development. The Company plans
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to provide its operating subsidiaries with financing and management services,
including accounting, planning, budgeting and human resources management. The
Company's subsidiaries also are development stage media companies which intend
to produce products in the motion picture, television, publishing and other
industries.

Except for certain limited operations, the Company's activities to date
have consisted primarily of raising capital, obtaining financing, acquiring
intellectual properties, and administrative activities relating to the
foregoing. The Company's proposed business, including both expansion of its
current limited operations and its proposed activities, requires substantial
additional equity or debt financing, which may not be available in a timely
manner, on commercially reasonable terms, or at all. The Company has not
exploited any of the properties acquired from Mr. Faw in 1993 due to the lack of
necessary financing. Since the Company is in the development stage, it is
subject to all the risks inherent in undertaking a new business venture.

See "Subsidiaries," below, for a description of the Company's plan of
operation for 1999, which is dependent upon the availability of necessary
financing, of which there can be no assurance.

FAW PURCHASE AGREEMENT

In February 1993, Studio City-Florida entered into an agreement with Larry
D. Faw, the President and Chairman of the Board of the Company, to acquire
direct ownership of various intellectual properties having an estimated value of
$7,226,000, including 72 motion picture properties, four television pilot
properties, 48 books for publication, four inventions, one franchise program and
one specialty product design and marketing program, in exchange for a promissory
note payable on February 16, 1995 in the amount of $1,554,027 (the "Faw Note"),
and warrants to purchase 5,000,000 shares of Common Stock of Studio
City-Florida. Interest on the Faw Note accrues at the rate of 2% per annum and
the principal amount was due and payable on February 16, 1995. Since 1993,
interest payments of $130,000 have been made on the Faw Note and accrued
interest payable to Mr. Faw at December 31, 1998 is $395,833. Since maturity,
the Faw Note has been extended for consecutive six month terms at the annual
interest rate of 9%. The warrants are exercisable until 2003 at $1.00 per share.
In addition, Mr. Faw received 1,000,000 shares of Class Preferred B Stock. See
"Description of Securities -- Warrants" and "Certain Transactions."

The estimated value of the intangible assets of $7,226,000 was determined
by Mr. Faw, without arm's length negotiations, by reference to industry
standards as detailed in the National Labor Relations Board's Collective
Bargaining Agreement between the Alliance of Motion Picture and Television
Producers and the Writers Guild of America which reflects the minimum
replacement costs and pass through financial obligations to industry-wide motion
picture and television producers and purchasers of intellectual properties. The
industry standards referred to in that agreement may have no relationship to
commercial, economic or fair market value of the intangible assets. See
"Collective Bargaining Agreement."

For financial reporting purposes, in accordance with generally accepted
accounting principles, the recorded amount of the intellectual properties was
zero, by virtue of the lack of evidence of historical predecessor cost.

THE MERGER

Effective July 1, 1996, Studio City-Florida merged with and into the
Company, pursuant to the Plan of Merger. Except for certain shares held by Larry
D. Faw, the President and Chairman of the Board, each of the issued and
outstanding shares of common stock of Studio City-Florida were converted into
one share of the Company's Common Stock, and 100,000,000 shares of common stock
of Studio City-Florida held by Larry D. Faw, were converted into 10,000,000
shares of the Company's Class A Preferred Stock. See "Description of
Securities."

Pursuant to the federal and state securities laws, it is unlawful to sell
any security unless the security is registered or exempt from the registration
requirements of such laws. The shares of the Company's Common Stock and Class A
Preferred Stock issued to more than 300 persons pursuant to the Plan of Merger
were not registered and may not have been exempt from registration.
Consequently, although the Company believed exemptions to be available, the
offer and sale of the shares of Common Stock may have been made in violation of
federal and state securities laws because of the relatively large number of
persons involved. The federal securities laws and most state laws provide for
rights of redress (in the form of rescission, or damages if the security has
been sold) for purchasers of securities sold in violation of the applicable
registration provisions of

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<PAGE> 10

such laws. There can be no assurance that claims asserting violations of state
or federal securities laws will not be asserted. A successful claim brought
against the Company could have a material adverse effect on the Company's
business, financial condition and results of operations.

SUBSIDIARIES

Set forth below is a description of the Company's subsidiaries. Unless
otherwise indicated, all of the subsidiaries described below are wholly-owned by
the Company. Each of its subsidiaries is in the development stage with a limited
or no operating history. Consequently, none of the subsidiaries has generated
significant revenues as of the date hereof. In addition, there can be no
assurance that any of the Company's subsidiaries will achieve significant sales
of its products or attain profitability.

Fawnsworth International Pictures Corporation, a Florida corporation
("FIPC"), was incorporated in October 1991 to engage in motion picture
production and distribution. FIPC currently owns fifteen intellectual
properties, which are in development and pre-production. FIPC also owns options
to acquire over one hundred intellectual properties.

Poc-It Publishers, Incorporated, a Florida corporation ("PPI"), was
incorporated in May 1993 to assemble, acquire, produce and publish various
literary properties. PPI currently owns the rights to forty-four titles, as well
as options for more.

Poc-It Comics, Incorporated, a Florida corporation ("PCI"), was
incorporated in March 1994, and is a comic book publisher. It owns three comic
book franchises for development which it plans to produce as comic books,
television series (live action and animation), video games and interactive
CD-ROM's. In May 1995, PCI published and distributed its first issue of the
comic book "Shadow Raven," which sold approximately 5,000 copies. PCI is 96.0%
owned.

A second comic book series of adventures, "The Earth Warriors," is planned
for 1999. It is about a group of 12 heroic characters who battle the forces of
evil -- earthly villains and super-powered aliens -- on Earth and in the
Universe. A third comic book series about a contemporary black superhero is in
preproduction (artist renderings, character development and scripting).

Zweig Knights Publishing Corporation ("Zweig"), a Florida corporation
incorporated in March 1994, is a publisher of limited first editions and special
editions of hardback children's books and inspirational family related
publications, that owns the rights to forty-four titles. In 1995, Zweig entered
into an agreement with Calico Animation and Creations to create the "animation
key cel art" (a combination of character studies, backgrounds and moves in flat
artwork) and "master paintings" (original watercolor paintings) for an
entertainment franchise entitled "The Nicholas Stories," a collection of three
illustrated children's books. An animatic broadcast version of the first of the
books, "The Boy with a Wish," was produced and in December 1996 was broadcast
regionally on a local cable and television station in the Tampa Bay, Florida
region. An animated television special of "The Nicholas Stories: A Holiday
Classic" is in pre-production. Zweig is 64.3% owned. Larry Faw, Harry Knights,
Genevieve Faw, Vincent Neville, Charles Flood, executive officers of the
Company, a family trust of Roger Hefler, the former chief executive officer, and
29 unrelated persons each beneficially own less than 1%.

"The Boy With a Wish" is about Saint Nicholas/Santa Claus, where he comes
from, how he leaves gifts and how he makes all his deliveries in one night. The
second book in the series, "The First Flight of Saint Nicholas," is about
Nicholas and his companion Mouka in a frozen land called Beyond Yon and
whimsical dwarfs, elves, gnomes and fairies. It was published in December 1998.
In the third book, "The Maiden Voyage of Kris Kringle," Nicholas is joined by
Kris, the woman to whom he gave a doll in the first book, and marries her; as
Kris Kringle, she helps him deliver all of the presents. Publication is planned
for late 1999. In addition, Zweig contemplates sales of the first two books,
limited edition lithographs from the first two books and the animatic videos
during 1999. Zweig also contemplates seeking a joint venture arrangement to
create a 30-minute animation of the first two books in 1999.

The International Children's Television Network, Inc., a Florida
corporation ("ICT Net"), was incorporated in April 1994 to develop certain
children's and youth oriented television properties and programming. ICT Net
currently has 15 literary properties which will provide approximately 12 hours
of children's programming. In 1995, ICT Net's literary property entitled
"Willie's Adventures" was published as a weekly serial in Knight-Ridder
newspapers as a children's travel and adventure weekly feature. ICT Net

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<PAGE> 11

contemplates developing a 30-minute pilot of "Willie's Adventures" as a
children's educational adventure during 1999. ICT Net is 99.9% owned; an
unrelated person beneficially owns less than 1%.

Quagga Entertainment Corporation ("Quagga"), incorporated in Florida in
March 1995, was formed to engage in the exploitation of motion picture and
television properties. Quagga completed its first production video: "Zoo Toonz
Volume I," a children's television pilot project narrated by two puppet
characters, and has completed all principal photography and rough cuts for
30-minute videos of Volumes II through VI. The pilot was premiered at the
National Association of Program and Television Executives convention in Las
Vegas, Nevada during January 1996. In addition, a third generation of Zoo Toonz
is being developed into a television pilot and 25 episodes of a new children's
educational television series. Quagga contemplates release of and sales of the
six Zoo Toonz videos during 1999. Quagga is 94.95% owned; Larry Faw, Genevieve
Faw, Vincent Neville, directors and executive officers of the Company, and a
private investor each own 1.25% and two unrelated investors each beneficially
own less than 1%.

Studio City Amusements, Inc., incorporated in Florida in November 1994,
owns two theatrical musical productions and was formed to develop and manage
entertainment properties and develop and produce specialty entertainment
projects (non-intellectual properties and asset management projects with real
property which provide continuous cash flows and revenue streams).

Non-Existent Major League Fantasy Sports Association, Incorporated was
incorporated in Florida in November 1994 to develop a series of interactive
radio and television fantasy sporting events. It owns "The 1994 Fan's Choice
Fantasy World Championship of Baseball," a 12-hour radio play of a fantasy
baseball world series, the first in a series of radio and television fantasy
sporting events.

Accinemetron Releasing Corporation ("Accinemetron"), incorporated in
Florida in March 1995, was formed to coordinate the distribution of various
product lines including films, television programming, videocassettes, audio
products and ancillary merchandise.

The Magic Shop, Inc. was incorporated in Florida in October 1995 to serve
as a production center and business incubator for entertainment related
companies.

Zollipe Cyberspace Corporation was incorporated in Florida in June 1996 to
develop computer programming and software for interactive games and information.

Zzoonzuit, Inc. was incorporated in Florida in June 1996 to design and
manufacture a new line of beachwear, swimwear and athletic clothing.

Xenomorph Digital Post, Inc. ("Xenomorph"), was incorporated in Florida in
June 1996 to be a digital broadcast and video post production center and on-line
producer of television programming. Xenomorph entered into a lease purchase
agreement to purchase an Avid Media 1000 digital nonlinear editing system and
has expanded its post production capabilities by purchasing television broadcast
production and post production equipment for a total purchase price of $348,400.
Xenomorph, in association with The International Children's Television Network,
is producing a children's educational video series which is planned to be
distributed in 1999; it is based on the travels of Willie, an extraordinary,
extinct, bird-like creature. "Willie's Adventures" was published as a weekly
installment in Knight-Ridder newspapers from about 1956 to 1965.

Pro-Sports Entertainment Group, Inc. was incorporated in November 1996 to
be a motion picture and television production group to produce entertainment
products focused on minority role models.

Zingrr N-2Aktiv Television Network, Inc. ("Zingrr") was incorporated in
November 1994 to serve as a partner in development, creation, maintenance and
programming of FCC licensed wireless cable stations and systems. Zingrr
contemplates sales of existing audio visual music videos, internet advertising
signboards and stock footage during 1999.

DISTRIBUTION

Distribution of Films. If and when produced, the Company will seek
distribution of its proposed films either to theaters or as original television
movies. These could be marketed to the networks, HBO, Showtime or for similar
movie channel distribution, or for syndicated distribution to independents. Once
a pilot has been produced, the Company will attempt to market to the networks or
through syndication to independents.

The Company currently does not have a pre-production distribution agreement
in place for any of its products and cannot offer any assurance that a
distribution agreement can be obtained or if obtained that such

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<PAGE> 12

agreement will be profitable. It is difficult for a small independent producer
to market a product to the networks or for independent syndication. The success
of such a marketing effort is dependent upon many factors including (a) the
quality of the product, (b) the fit of the product to the network or syndicate's
other program mix and selection criteria, (c) perceived public trends, (d) the
reputation of the producers, and (e) in part, the individual producer's
interpersonal relationships within the industry.

Although management believes favorable distribution agreements can be
obtained, the lack of a preproduction agreement substantially increases the risk
to these projects and to the inventors.

Distribution of Literary Properties. The Company intends to seek
distribution of its literary properties through two of its subsidiaries, Zweig
and Accinematron, by direct sales, televised infomercials and special events.

The Company intends to seek to finance operations through a combination of
funding sources, including borrowings from management and principal shareholders
and public and private securities offerings. There are no present agreements,
contracts, understandings or other arrangements for such necessary financing.

TRADEMARKS

The Company's rights to characters are principal assets of the Company.
Although used in interstate commerce, such proprietary information is not
subject to any trademark, service mark or similar registration or protection at
this time. There can be no assurance that any such application, if and when
filed, will be approved, or that the Company will have the financial and other
resources necessary to enforce its proprietary rights against infringement by
others. The inability of the Company to obtain adequate protection of, or to
enforce, its proprietary rights could have a material adverse effect on the
Company.

ROYALTY AGREEMENTS

Under certain royalty agreements with various unaffiliated individuals, the
Company is obligated to make contingent payments, royalties and profit
participation payments ranging from 1% to 10% of the gross net profits.

COLLECTIVE BARGAINING AGREEMENT

The Company is represented by the Alliance of Motion Picture and Television
Producers in its Collective Bargaining Agreement under the auspice of the
National Labor Relations Board, which includes Signatory status with various
Unions and Guilds. The Collective Bargaining Agreement requires that the Company
meet negotiated requirements to the various Unions and Guilds, when applicable,
and maintain a minimum cost from service contracts for various Union and Guild
members. These costs are carried over into future production and pass-through to
any purchaser. These costs and obligations are considered to be perpetual.

COMPETITION

The entertainment business in general, and the film and television
entertainment industry in particular, is undergoing significant changes.
Alternative forms of filmed entertainment have become available, including
expanded pay and basic cable television, pay-per-view programming, and home
entertainment equipment. Given technological developments and shifting consumer
tastes, it is difficult to predict what effect these changes will have on the
potential overall revenue for feature-length motion pictures. Management
believes however that these changes within the television industry will create
an increased demand for new products and, in this respect, these trends are
favorable to the Company.

Competition in the film industry. There is substantial competition in the
industry for a limited number of producers, directors, actors and properties
which are able to attract major distribution in all media and all markets
throughout the world. The motion picture business is highly competitive and
extremely high profile in terms of name recognition, with relatively
insignificant barriers to entry and with numerous firms competing for the same
directors, producers, actors/actresses, distributors and theaters, among other
items. There is intense competition within the film industry for exhibition
times at theaters, as well as for distribution in other media, and for the
attention of the movie-going public and other viewing audiences. Competition for
distribution in other media is intense.

Each of its subsidiaries is in the development stage with a limited or no
operating history. Consequently, none of the subsidiaries has generated revenues
as of the date hereof. In addition, there can be no assurance that any of the
Company's subsidiaries will achieve significant sales of product or attain
profitability.

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<PAGE> 13

FAW PURCHASE AGREEMENT

In February 1993, Studio City-Florida entered into an agreement to acquire
direct ownership of various intellectual properties having an estimated value of
$7,226,000, including 72 motion picture properties, four television pilot
properties, 48 books for publication, four inventions, one franchise program and
one specialty product design and marketing program in exchange for a promissory
note payable in the amount of $1,554,027 (the "Faw Note") payable to Larry D.
Faw, the President and Chairman of the Board of the Company, and warrants to
purchase 5,000,000 shares of Common Stock of Studio City-Florida exercisable at
$1.00 per share until February 16, 2003. The principal amount was due and
payable on February 16, 1995, with interest at the annual rate of 2%. Since
maturity, when the Company was unable to pay the Faw Note, it has been extended
for consecutive six month terms at an annual interest rate of 9%. Since 1993,
the Company has paid $130,000 interest on the Faw Note and accrued interest
payable to Mr. Faw at March 31, 1999 was $395,833. In addition, Mr. Faw received
1,000,000 shares of Class Preferred B Stock. See "Description of Securities" and
"Certain Transactions." The Faw Note is a demand obligation, but there is no
schedule for repayment of principal or interest. Mr. Faw has indicated that he
has no present plan to demand payment.

The purchase price of the intangible assets was determined by Mr. Faw,
without arm's length negotiations, by reference to industry standards as
detailed in the National Labor Relations Board's Collective Bargaining Agreement
between the Alliance of Motion Picture and Television Producers and the Writers
Guild of America which reflects the minimum replacement costs and pass through
financial obligations to industry-wide motion picture and television producers
and purchasers of intellectual properties. The industry standards referred to in
that agreement may have no relationship to commercial, economic or fair market
value of the intangible assets. See "Collective Bargaining Agreement."

For financial reporting purposes, in accordance with generally accepted
accounting principles, the intellectual properties acquired are recorded on the
financial statements as $77,315 as of December 31, 1998 and March 31, 1999, by
virtue of the lack of evidence of historical predecessor cost.

EMPLOYEES

At June 1, 1998, the Company had two full-time employees. The Company has
never experienced a work stoppage or interruption due to a labor dispute. In
1998, employment agreements, which expire on April 8, 2000 unless renewed, were
negotiated and completed with the following persons to serve in the following
positions: Larry D. Faw, Chairman of the Board and President; Vincent J.
Neville, Vice Chairman and Chief Executive Officer; Genevieve H. Faw, Director
and Senior Vice President; Andrew C. Rigrod, Chief Operations Officer; Walter
Johnson Williams, Chief Financial Officer;; Harry B. Knights, Senior Vice
President-Operations; Charles H. Flood, Senior Vice President-Sales; Wallis M.
Spence, Senior Vice President-Financial Marketing; James W. Courchaine, Senior
Vice President-Logistics; and John A. Churchill, Jr., Controller. See
"Management" and "Employment Agreements."

The Company expects to retain additional employees in the areas of
production and post production as permitted by its financial condition and
required by its business. Most screenwriters, performers, directors and
technical personnel who will be involved in the Company's films are members of
guilds or unions which bargain collectively with producers on an industry-wide
basis from time to time.

REAL PROPERTIES

The Company currently leases approximately 410 square feet for its
executive offices, at 14400 Southwest 46th Court, Ocala, Florida, for $400 per
month on a month-to-month basis from Larry D. Faw, the Chairman of the Board and
President. The Company believes that the terms of such leasing arrangement are
no less favorable to the Company than those that could have been obtained from
an independent third party.

The Company also leases approximately 1700 square feet at $675 per month
for its studio located at 4716 North Lois Avenue, Tampa, Florida. The one-year
lease expires April 30, 1999.

LEGAL PROCEEDINGS

As a multimedia holding company in the entertainment industry, the Company
is often required to defend its rights and license for intellectual properties
that it either owns or serves as a joint venture partner.

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<PAGE> 14

Currently, the Company and its subsidiary, PCI, are defending their rights in
the production and distribution of an entertainment franchise based on a comic
book story entitled "Shadow Raven." The Company and PCI filed a verified
complaint for declaratory judgment in the Circuit Court of the Ninth Judicial
Circuit in and for Orange County, Florida against the author and owner of
certain copyrighted works entitled "Shadow Raven" and "The Shadow Raven
Sequels," and his corporation, who had irrevocably assigned the copyrighted
works in a 1994 agreement, to confirm their rights. The principals in the
pending action are currently attempting to resolve the issues in negotiation.

The Company and its subsidiary, Quagga, are defending a challenge to the
companies' rights associated with a joint venture to create, produce, distribute
and exploit an intellectual property entitled "Zoo Toonz," a joint venture where
the timeliness of the creation of finished products is in question. Litigation
is pending in this matter, and it has been determined that the production will
be completed without the assistance of the joint venture partner, and the
Company and its financial partners will seek to recoup all of their investment.
The action is pending in the Circuit Court in and for Pinellas County, Florida,
where the co-author and original co-owner of the intellectual property entitled
"Zoo Toonz" filed a complaint for declaratory relief against the Company and Mr.
Faw, to confirm ownership and control of the intellectual property, and for
unspecified damages (which do not exceed $15,000) for services rendered pursuant
to the 1995 joint venture agreement to exploit the property. The defendants have
filed an answer and affirmative defenses to the complaint, and a counterclaim
for damages (that exceed $15,000) for breach of fiduciary duty and breach of
contract.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The accompanying consolidated balance sheets of the Company and
subsidiaries as of December 31, 1998 and 1997 and the related consolidated
statements of operations, changes in stockholders' equity and cash flows for the
years ended December 31, 1991 through 1998 (inception through December 31,
1998), appearing elsewhere in this Prospectus, are audited and have been
prepared in accordance with generally accepted accounting principles.

Studio City-Florida was a development stage multimedia company incorporated in
1991 to engage in asset development, business management, production and
post-production studio operation, motion picture studio operation, tourist
attraction operation, the development of motion pictures for theatrical
exhibition, for television and home video, and in the development, production
and distribution of printed publications. At the time of the merger with CVT
Corp. of America, Studio City-Florida owned a large number of intellectual
properties and a partial interest in other intellectual properties, but had not
generated significant revenues. The Company was incorporated in New York under
the name "CVT Corp. of America" ("CVT") in March 1984 and, until 1993, was
engaged in limited sales, manufacturing and marketing operations of continuous
variable speed transmissions. Unable to finance the research and development
necessary to continue operation, CVT ceased operations in 1993. On June 28,
1996, CVT changed its name to "Studio City Holding Corporation" and, effective
July 1, 1996, merged with Studio City-Florida, a development stage media holding
company.

The Company is a development stage media holding company specializing in
the creation of "entertainment franchises" and the development of its fifteen
wholly-owned or majority-owned media subsidiaries. Except for certain limited
operations, the Company's activities to date primarily have consisted of raising
capital, obtaining financing, acquiring intellectual properties, and
administrative activities relating to the foregoing.

Each of its subsidiaries is in the development stage with a limited or no
operating history. Consequently, the subsidiaries have generated limited or no
revenues as of the date hereof. In addition, there can be no assurance that any
of the Company's subsidiaries will achieve significant sales of its products or
attain profitability.

During the years ended December 31, 1996, 1997 and 1998, the Company had
net losses of $572,506 and $523,483, respectively. At March 31, 1999, the
cumulative net loss since inception was $2,445,552, reflecting the cost of
development and other start-up activities without significant offsetting
revenues. The Company's business is capital intensive and it expects to continue
to incur significant losses in the future.
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<PAGE> 15

A description of the Company's plan of operation for 1999, which is
dependent upon the availability of necessary financing, of which there can be no
assurance, is included under "Business--Subsidiaries," above. While management
is cautiously optimistic of generating revenues from the contemplated sales
during 1999 to meet the projected costs of such activities, there are no
agreements, contracts or arrangements for any sales and there remain many
uncertainties, based upon historical results, and additional financing likely
will be necessary.

As of the date hereof, the Company has no agreement, arrangement or
understanding with any person for financing. The Company anticipates that it
will continue to meet its necessary cash requirements by the private sale of
securities, as well as advances from management, the main source of liquidity in
the past. If additional financing were necessary and were unavailable, the
Company's plan of operation during 1999, as well as its financial position and
condition, would be materially adversely affected. There are no plans to
purchase significant equipment, nor are any significant changes in the number of
employees expected. The Company contemplates using available funds for business
purposes and not for payment of the Faw Note or preferred stock dividends.

Year 2000. Because many computer and computer applications define date by
the last two digits of the year, "00" may not be properly identified as the year
2000. This error could result in miscalculations or systems failure in computer
systems, network elements, software applications and other business systems that
have time sensitive programs. Management has reviewed its operations and does
not anticipate that the so-called Year 2000 issue will have a significant impact
on its business or require a significant commitment of resources to resolve
potential problems associated with this issue.

There can be no assurance, however, that the Company will be unaffected by
the Year 2000 issue affecting its customers or suppliers, but the Company does
not believe the Year 2000 readiness of its customers or suppliers will have a
material impact on the Company's business or financial statements.

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<PAGE> 16

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The directors and executive officers of the Company are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- ------------------------------------------
<S> <C> <C>
Larry D. Faw.............................. 50 Chairman of the Board and President
Vincent J. Neville........................ 67 Vice Chairman of the Board and Chief
Executive Officer
Genevieve H. Faw.......................... 38 Senior Vice President, Secretary and
Director
Andrew C. Rigrod.......................... 56 Chief Operations Officer
Walter Johnson Williams................... 49 Chief Financial Officer
Harry B. Knights.......................... 51 Senior Vice President -- Operations
Charles H. Flood.......................... 48 Senior Vice President -- Sales
Senior Vice President -- Financial
Wallis M. Spence.......................... 50 Marketing
James W. Courchaine....................... 67 Senior Vice President -- Logistics
John A. Churchill, Jr..................... 59 Controller
</TABLE>

Each director is elected to hold office until the next annual meeting of
stockholders and until his successor is elected and qualified. All officers
serve at the discretion of the Board of Directors. Of all the directors and
executive officers of the Company, only Mr. Faw, Mrs. Faw and Mr. Knights devote
full time and attention to its affairs; the other directors and executive
officers devote only such (usually minimal) time to the Company's affairs as is
required from time to time.

The following sets forth certain biographical information with respect to
the directors and executive officers of the Company:

Larry D. Faw has served as Chairman of the Board of Directors and President
of the Company since inception of Studio City-Florida in 1991. Mr. Faw has
twenty-six years of experience in the financing, production, and distribution of
feature motion pictures, documentaries, television commercials, and short films.
Mr. Faw is the husband of Genevieve Faw.

Vincent J. Neville was a director and Senior Vice President of the Company
from November 1995 until December 1997, when he became Vice Chairman and Chief
Executive Officer. He has served as President of Finest Security Service Inc.,
Flushing, New York, since 1986, and as President of T.J. Catering Inc.,
Flushing, New York, since June 1997. Also, Mr. Neville has over twenty years
experience in law enforcement as a former Detective with the New York City
Police Department, where for eleven years he served as an Investigator and
Personal Bodyguard for the District Attorney of Queens County.

Genevieve H. Faw has served as an Senior Vice President, Secretary and
director of the Company since inception of Studio City-Florida in 1991. Ms.
Faw's background includes accounting, business management, feature-length motion
picture production, and the publication of children's books and specialty niche
market publications. Ms. Faw is the wife of Larry Faw.

Andrew C. Rigrod has served as Chief Operations Officer since April 1998.
Mr. Rigrod, who graduated from Cornell Law School in 1966 and was an editor of
the Cornell Law Review, has been practicing law for 30 years, specializing in
entertainment law exclusively for the last 24 years, representing producers,
writers, directors and actors.

Walter Johnson Williams has served as Chief Financial Officer since January
1998. Mr. Williams has served as an adviser to the Company since 1992. Mr.
Williams is the President of American Business Econometrics, Inc., an economic
consultancy firm he founded in 1983 which publishes The Straight Shooter
Newsletter and analyzes government reports through the Shadow Bureau of
Government Statistics. He also provides consulting services to major financial
institutions and Fortune 500 companies, as well as to private individuals; he
also provides economic commentary to financial newspapers, journals and other
publications and radio and television business and finance programs.

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<PAGE> 17

Harry B. Knights has served as Senior Vice President-Operations since March
1998. Mr. Knights also has served as Co-Publisher and Chief Operations Officer
of Zweig Knights Publishing Corporation, a majority owned subsidiary, since May
1994. Mr. Knights authored "The Nicholas Stories: The Boy With A Wish, The First
Flight of St. Nicholas; The Maiden Voyage of Kris Kringle;" and "The Spirit of
Christmas" and "The Homecoming." He was discharged from personal bankruptcy in
April 1994.

Charles H. Flood has served as Senior Vice President-Sales since October
1996. Mr. Flood also has served as Co-Publisher and President of National Sales
of the Eleemosynary/Traditional Publishing Division of Zweig Knights Publishing
Corporation, since July 1994. Mr. Flood has over twenty years of experience in
sales management, product development, marketing, education and publishing. His
experience includes custom publishing, interactive CD ROM development,
sub-rights and co-publishing for animation, joint venture television and
publishing programs, and, eleemosynary publishing.

Wallis M. Spence has served as Senior Vice President-Financial Marketing
since February 1998. He owns The Striker Steel Co. (steel framed homes), since
February 1996, and is a self-employed financial consultant specializing in
portfolio/pension funds for long term investment, since 1989.

James W. Courchaine has served as Senior Vice President-Logistics since
June 1998. In 1979, Mr. Courchaine retired from the United States Air Force
after twenty years and became a self-employed financial consultant specializing
in financial services and planning for insurance companies. He was discharged
from personal bankruptcy in October 1995.

John A. Churchill, Jr. will serve as Controller after the effective date of
the Registration Statement of which this Prospectus is a part. He owns Central
Business Services Corporation, a financial services company, since 1990. He
serves as Treasurer of E.L. Trevena, Inc., a demolition company, since 1996, and
was Chairman of Agrovit, Inc., a fertilizer brokerage, from 1991 to 1996.

EXECUTIVE COMPENSATION

Neither the Chief Executive Officer nor any other executive officer of the
Company received total salary and bonus in excess of $100,000 in any of the
fiscal years ended December 31, 1996, 1997 or 1998. Roger Hefler, who died on
December 26, 1997, received $24,000 as Vice Chairman and Chief Executive Officer
during each of the fiscal years ended December 31, 1996 and 1997.

DIRECTORS' COMPENSATION

Directors of the Company are not compensated for their services.

EMPLOYMENT AGREEMENTS

On April 8, 1998, the Company entered into employment agreements with all
executive officers. The employee agreements provide for remuneration, stock
awards, and performance awards. Each executive officer will receive (i) a
sign-on award of 25,000 shares of stock, (ii) cash compensation at the end of
recapitalization level 1 ($1,000,000 in new capital) of $48,000 per annum; (iii)
stock award of 25,000 shares at the end of the 1st year of employment; (iv) cash
compensation at the end of capitalization level 2 ($10,000,000 in new capital)
of $75,000 per annum; (v) stock award of 25,000 shares at the end of the 2nd
year of employment; and (vi) stock award of 25,000 shares at the end of the 3rd
year of employment. Each employment agreement expires on April 8, 2000. Pursuant
to the employment agreements, Larry D. Faw serves as Chairman of the Board of
Directors and President, Vincent J. Neville serves as Vice Chairman and Chief
Executive Officer, Genevieve H. Faw serves as a Director, Secretary and Senior
Vice President-Children's Programming, Andrew C. Rigrod, Esquire serves as Chief
Operations Officer, Walter Johnson Williams serves as Chief Financial Officer,
Wallis M. Spence serves as Senior Vice President-Financial Marketing, Harry B.
Knights serves as a Senior Vice President-Operations, Charles H. Flood serves as
Senior Vice President-Sales, James W. Courchaine serves as Senior Vice
President-Logistics; and John A. Churchill, Jr. serves as Controller. Each of
the executive officers will be entitled to receive reimbursement for all
reasonable expenses incurred in connection with the performance of any of
his/her obligations pursuant to the Employment Agreements. The Employment
Agreements contain a covenant not to compete and an agreement to keep
confidential certain information.

16
<PAGE> 18

LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS

The Certificate of Amendment and Restated Certificate of Incorporation, and
the By-Laws of the Company, as amended, provide that the Company shall indemnify
its officers and directors to the full extent permitted by the Business
Corporation Law of the State of New York.

Reference is hereby made to Section 402(b) of the Business Corporation Law
of the State of New York relating to the indemnification of officers and
directors, which Section is hereby incorporated herein by reference.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or others pursuant to the
foregoing provisions, the Company has been informed that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act of 1933 and is therefore unenforceable.

INCENTIVE STOCK OPTION PLAN

In March 1993, the Board of Directors and shareholders approved in
principle an Employee Incentive Stock Option Plan (the "Plan") for full time
employees including executive officers. Under the Plan, the Company would issue
options to purchase shares of the Company's Common Stock, exercisable at the
current market value (110% of current market value only to 10% or greater
stockholders) up to $100,000 annually. The Plan would terminate on March 1,
2001, unless renewed.

Under the Plan, any officer or director owning 10% of the voting plan of
the Company would be restricted from exercising his/her options to three years
after the receipt of such Grant. Additional provisions would be as follows: (1)
options terminated or expired, revert back to the Plan, (2) unpurchased option
shares remain in the Plan, (3) options are exercisable by the optionee or
his/her estate, (4) options are not transferable, and, (5) carryover amounts
from one year to the next year cannot exceed 50% of the Plan. The Company will
reserve 500,000 shares of Common Stock for issuance under the Plan. The Plan has
not been implemented and no options have been granted under the Plan.

CERTAIN TRANSACTIONS

FAW PURCHASE AGREEMENT

In February 1993, Studio City-Florida entered into an agreement with Larry
D. Faw, Chairman of the Board of Directors and President, to acquire direct
ownership of various intellectual properties having an estimated value of
$7,226,000, including 72 motion picture properties, four television pilot
properties, 48 books for publication, four inventions, one franchise program and
one specialty product design and marketing program, in exchange for a promissory
note payable in the amount of $1,554,027 and warrants to purchase 5,000,000
shares of Common Stock of Studio City-Florida exercisable at $1.00 per share
until February 16, 2003. The principal amount was due and payable on February
16, 1995, with interest at the annual rate of 2%. Since maturity, when the
Company was unable to pay the Faw Note, it has been extended for consecutive six
month terms at an annual interest rate of 9%. Since 1993, the Company has paid
$130,000 in interest on the Faw Note and accrued interest payable to Mr. Faw at
December 31, 1998 was $395,833. The Faw Note is a demand obligation, but there
is no schedule for repayment of principal or interest.

The purchase price of the intangible assets was determined by reference to
industry standards as detailed in the National Labor Relations Board's
Collective Bargaining Agreement between the Alliance of Motion Picture and
Television Producers and the Writers Guild of America which reflects the minimum
replacement costs and pass through financial obligations to industry-wide motion
picture and television producers and purchasers of intellectual properties. The
industry standards referred to in that agreement may have no

17
<PAGE> 19

relationship to commercial, economic or fair market value of the intangible
assets. See "Collective Bargaining Agreement."

OTHER

Effective July 1, 1996, Studio City-Florida merged with and into the
Company, pursuant to the Plan of Merger. Pursuant to the Plan of Merger (i)
100,000,000 shares of Common Stock of Studio City-Florida held by Larry D. Faw
were converted into 10,000,000 shares of the Company's Class A Preferred Stock,
(ii) 10,000,000 shares of Common Stock of Studio City-Florida held by Mr. Faw
were converted into 1,000,000 shares of the Company's Class B Preferred Stock,
(iii) warrants to purchase 5,000,000 shares of Common Stock of Studio
City-Florida were converted into warrants to purchase 5,000,000 shares of Common
Stock of the Company, and (iv) each of the remaining issued and outstanding
shares of Common Stock of Studio City-Florida were converted into one share of
the Company's Common Stock. In addition, Mr. Faw received 1,000,000 shares of
Class Preferred B Stock in connection with the merger.

See "Business -- Subsidiaries" for a description of the ownership interests
of certain directors and executive officers in subsidiaries of the Company and
Note 12 to Consolidated Financial Statements for information about the potential
profit participation of certain directors and executive officers in certain
literary properties of such subsidiaries. No amounts have been paid to date to
any director or executive officer in connection with any of those interests and
it is not possible to predict whether or when any amounts might be paid in the
future or the magnitude of any future amounts.

PRINCIPAL STOCKHOLDERS

The following table sets forth, as of March 31, 1999, the beneficial
ownership of shares of the Common Stock of the Company by any person known to
the Company to be the beneficial owner of more than five per cent; each of the
directors and executive officers; and all directors and executive officers as a
group.

<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL
NAME OF BENEFICIAL OWNER OWNERSHIP OF COMMON STOCK(1)(2) PER CENT OF TOTAL VOTING POWER(2)
------------------------ ------------------------------- ---------------------------------
<S> <C> <C>
Larry D. Faw......................... 10,196,277(2)(3) 83.1%
14400 Southwest 46th Court
Ocala, Florida 34473
Vincent J. Neville................... 442,000(4) *
Genevieve H. Faw..................... 10,196,277(2)(3) 83.1%
14400 Southwest 46th Court
Ocala, Florida 34473
Andrew C. Rigrod..................... 25,000 *
Walter Johnson Williams.............. 526,000 *
Harry B. Knights..................... 181,000(5) *
Charles H. Flood..................... 30,000 *
Wallis M. Spence..................... 25,000 *
James W. Courchaine.................. 289,400(6) *
John A. Churchill, Jr................ 1,154,400(7) *
All directors and officers as a
group.............................. 12,869,077 85.2%
</TABLE>

- ---------------
* Less than one per cent.

(1) Except as otherwise indicated, each of the persons named has sole voting and
investment power with respect to all shares of Common Stock beneficially
owned. Beneficial ownership is calculated in accordance with Rule 13d-3(d)
of the Securities Exchange Act of 1934.

18
<PAGE> 20

(2) The Company has two classes of voting securities, Common Stock and Class A
Preferred Stock. Holders of Class A Preferred Stock vote together with
holders of Common Stock and are entitled to ten votes for each share of
Class A Preferred Stock on all matters voted upon by the shareholders of the
Company. Larry D. Faw, Chairman of the Board and President of the Company
beneficially owns all outstanding shares of Class A Preferred Stock, or 100%
of that class, and therefore is the beneficial owner of 83.1% of the voting
power of the Company. The Class A Preferred Stock is included in the
calculation of the per cent of total voting power. The Class B Preferred
Stock, each share of which is convertible into ten shares of Common stock at
the annual rate of 20% commencing two years after acquisition, are not
included in the calculation.

(3) Includes: 2,870,000 shares held by Larry D. Faw, Incorporated, of which Mr.
Faw is the President; 401,277 shares held by the Von Falconbourg Family
Trust, of which Mr. Faw is the Managing Trustee; 1,000,000 shares held by
Morgan Rothchild Anzo, Inc. for the account and benefit of Mr. Faw; warrants
to purchase 5,000,000 shares at $1.00 per share; and 925,000 shares held by
Genevieve H. Faw, Mr. Faw's wife. Does not include 10,000,000 shares of
Class A Preferred Stock held by Mr. Faw, or 1,000,000 shares of Class B
Preferred Stock held by each of Mr. Faw and the Von Falconbourg Family trust
or 300,000 shares of Class B Preferred Stock held by Mrs. Faw. Each of Mr.
Faw and Mrs. Faw disclaims beneficial ownership of the other's shares.

(4) Includes 5,000 shares held by Mr. Neville's wife.

(5) Includes 6,000 shares held jointly with Mr. Knight's wife. Does not include
35,000 shares of Class B Preferred Stock.

(6) Includes 153,400 shares held by the Courchaine Family Partnership, of which
Mr. Courchaine is the managing partner. Includes 10,000 shares held jointly
with Mr. Courchaine's wife. Does not include 35,000 shares of Class B
Preferred Stock held jointly with Mr. Courchaine's wife.

(7) Includes 12,000 shares held by five members of Mr. Churchill's family.

DESCRIPTION OF SECURITIES

GENERAL

The aggregate number of shares that the Corporation had authority to issue
is 85,000,000 shares, consisting of (i) 40,000,000 shares of Common Stock, (ii)
10,000,000 shares of Class A Preferred Stock, (iii) 25,000,000 shares of Class B
Preferred Stock and (iv) 10,000,000 shares of Preferred Stock, $.0001 per share
par value, to be issued in series. The Board of Directors has the authority to
issue Preferred Stock in series, fix the number of shares to be included in such
series, the dividends payable on the shares of such series, the redemption price
of the shares of such series, if any, and the terms and conditions of such
redemption, the terms and conditions under which the shares of such series are
convertible, if they are convertible, and other rights, preferences and
limitations pertaining to such series.

The relative rights, preferences and limitations of the shares of each
class are as follows:

Voting. Every holder of Common Stock is entitled to one vote for each
share of Common Stock on all matters voted upon by the shareholders of the
Corporation. Every holder of Class A Preferred Stock is entitled to ten votes
for each share of Class A Preferred Stock on all matters voted upon by the
shareholders of the Corporation and shall vote as a class with the holders of
Common Stock of the Corporation on all matters. The holders of Class B Preferred
Stock have no voting rights except as required by law.

Dividends. The holders of Class B Preferred Stock are entitled to receive,
out of funds legally available therefor, cumulative preferential dividends at
the rate of 12% per annum per share of Class B Preferred Stock, based on net
income before taxes. Dividends are payable on the Common Stock when and if
declared by the Board of Directors after payment of dividends on the Class B
Preferred Stock.

Liquidation. In the event of the voluntary or involuntary liquidation,
dissolution or other termination of the Company, the holders of the Class A
Preferred Stock are entitled to be paid $.06 per share of the Class A Preferred
Stock and an amount equal to any unpaid accrued dividends before any amount
shall be paid to the holders of the Class B Preferred Stock or the Common Stock;
and after such payment to the holders of the

19
<PAGE> 21

Class A Preferred Stock, the holders of the Class B Preferred Stock are entitled
to be paid $.06 per share of the Class B Preferred Stock and an amount equal to
any unpaid accrued dividends before any amount shall be paid to the holders of
the Common Stock. After payment shall have been made to the holders of Class A
Preferred Stock and Class B Preferred Stock of the full amounts to which they
shall be entitled, the holders of Class A Preferred Stock, Class B. Preferred
Stock and Common Stock are entitled to share ratably in all remaining assets of
the Corporation available for distribution, according to the number of shares of
capital stock held, with the holders of Class B Preferred Stock and the holders
of Common Stock to share ratably according to the number of shares of Class B
Preferred Stock and/or Common Stock held by them, and the holders of Class A
Preferred Stock to share ratably according to the number of shares of Common
Stock into which such shares of Class A Preferred Stock may be converted.

Conversion. Shares of Class B Preferred Stock may be converted into shares
of Common Stock on the basis of one share of Class B Preferred Stock for ten
shares of Common Stock, at the rate of 20% per year commencing two years after
issuance, which ranges from 1993 for the 1,000,000 shares held by Mr. Faw to
1998 for the 2,825,834 shares held by others.

Warrants. Warrants to purchase 500,000 shares of Common Stock are
exercisable at $3.00 per share and expire on December 31, 1999. Warrants to
purchase 5,000,000 shares of Common Stock, held by Mr. Faw, are exercisable at
$1.00 per share and expire on February 16, 2003. None of the Warrants entitle
the holder to any voting rights or other rights as a stockholder of the Company.

TRANSFER AGENT

The Company's transfer agent is Continental Stock Transfer & Trust Company,
2 Broadway, New York, New York 10004.

SELLING SECURITY HOLDERS

The name of each Selling Security Holder, any position or office held with
the Company and the amount of securities owned before the offering and after the
offering is complete are set forth in Appendix A. The percentages of the classes
before the offering is less than one percent for all Selling Security Holders
except as indicated under "Principal Shareholders," and the percentages of the
classes after the offering is complete is zero (-0-) for all Selling Security
Holders, assuming all securities offered are sold.

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this Offering, there will continue to be outstanding
31,282,001 shares of Common Stock (including 3,800,000 treasury shares) and
3,825,834 shares of Class B Preferred Stock. Such shares of Common Stock and
Class B Preferred offered hereby will be freely tradable in the public market
without restriction under the Securities Act of 1933, as amended (the
"Securities Act"). There is no public trading market for such shares at present
and there can be no assurance that such a market will develop in the future. No
prediction can be made as to the effect, if any, that future sales of shares, or
the availability of shares for future sale, will have on the market price of the
Common Stock prevailing from time to time. Sales of substantial amounts of
Common Stock in the public market, or the perception that such sales could
occur, could adversely affect prevailing market prices for the Common Stock. If
such sales reduce the market price of the Common Stock, the Company's ability to
raise additional capital in the equity markets also could be adversely affected.

LEGAL MATTERS

The validity of the securities offered hereby has been passed upon for the
Company by Gerald Weinberg, P.C., Albany, New York.

EXPERTS

The financial statements of the Company at December 31, 1996, 1997 and 1998
and for the years then ended, appearing in this Prospectus and Registration
Statement have been audited by Peel Schatzel & Wells, P.A., independent
auditors, as set forth in their report thereon appearing elsewhere herein and in
the
20
<PAGE> 22

Registration Statement, and are included in reliance upon such report given upon
the authority of such firm as experts in accounting and auditing. The financial
statements of the Company at March 31, 1999 are unaudited and include all
adjustments which in the opinion of management are necessary in order to make
the financial statements not misleading.

ADDITIONAL INFORMATION

The Company currently is not a reporting company under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). As a result of the
offering made hereby, the Company will become subject to the periodic and other
informational requirements of the Exchange Act. The Company intends to
distribute to its shareholders Annual Reports containing audited financial
statements and may distribute quarterly reports as determined by the Board of
Directors of the Company.

The Company has filed with the Commission the Registration Statement under
the Securities Act with respect to the securities offered by this Prospectus. As
permitted by the rules and regulations of the Commission, this Prospectus does
not contain all the information set forth in the Registration Statement and the
exhibits thereto. Statements contained in this Prospectus as to the contents of
any contract or other documents referred to herein are not necessarily complete,
and in each instance reference is made to the copy of such contract or other
document filed as an exhibit to the Registration Statement, each such statement
being qualified in all respects by such reference. For further information with
respect to the Company and the securities offered hereby, reference is made to
the Registration Statement and the exhibits thereto, which may be may be
inspected and copied at certain regional offices of the Commission located at
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511 and 75 Park Place, 14th Floor, New York, New York 10007, and
may be inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549-1004. In addition, the Company is required to file electronic
versions of these documents with the Commission through the Commission's
Electronic Data Gathering, Analysis and Retrieval (EDGAR) system. The Commission
maintains a World Wide Web site at http://www.sec.gov that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the Commission.

21
<PAGE> 23

STUDIO CITY HOLDING CORPORATION
AND SUBSIDIARIES

Independent Auditor's Report
and
Financial Statements

October 21, 1991 (Inception) to March 31, 1999

22
<PAGE> 24

STUDIO CITY HOLDING CORPORATION AND INCLUDABLE SUBSIDIARIES

OCTOBER 21, 1991 (INCEPTION) TO MARCH 31, 1999

TABLE OF CONTENTS

<TABLE>
<S> <C>
Independent Auditor's Report................................ F-2
Consolidated Financial Statements
Consolidated Balance Sheets............................... F-3
Consolidated Statements of Operations..................... F-4
Consolidated Statements of Changes in Stockholder's
Equity................................................. F-5
Consolidated Statements of Cash Flows..................... F-6
Notes to Consolidated Financial Statements................ F-7
</TABLE>

F-1
<PAGE> 25

INDEPENDENT AUDITOR'S REPORT

To the Board of Directors and Stockholders
Studio City Holding Corporation

We have audited the accompanying consolidated balance sheets of Studio City
Holding Corporation (a New York corporation) (a development stage company) and
subsidiaries (development stage companies) as of December 31, 1998 and 1997, and
the related consolidated statements of operations, changes in stockholders'
equity, and cash flows for the years ended December 31, 1991 through 1998
(inception through December 31, 1998). These consolidated financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements present fairly, in
all material respects, the financial position of Studio City Holding Corporation
and subsidiaries as of December 31, 1998 and 1997, and the results of their
operations, changes in stockholders' equity and their cash flows for the years
ended December 31, 1991 through 1998 (inception through December 31, 1998) in
conformity with generally accepted accounting principles.

As described in Notes 2, 3 and 20 to the financial statements, certain
errors were discovered by management during the current year that pertained to
the years ended December 31, 1997 to 1991. Accordingly, these financial
statements have been restated to correct the errors. As described in Note 2, an
error resulting in the overstatement of previously reported offering costs was
discovered by management due to the expiration of the offering in 1997. As
described in Note 3, the Company changed its method of accounting for intangible
assets acquired from the majority stockholder by recording the amount in excess
of the predecessor's cost as a special distribution to stockholder. Furthermore,
as described in Note 20, the Company has changed its accounting for equity
securities subject to rescission by classifying the potential rescission
liability outside of permanent equity.

/s/ Peel, Schatzel & Wells, P.A.

Peel, Schatzel & Wells, P.A.
St. Petersburg, Florida

April 19, 1999

F-2
<PAGE> 26

STUDIO CITY HOLDING CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31, (UNAUDITED)
------------------------- MARCH 31,
1997 1998 1999
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents............................. $ 18,448 $ 80,178 $ 125,387
Intangible assets (Note 3)............................ 77,315 77,315 77,315
Investment in joint ventures and stock................ 56,823 56,823 56,823
Prepaid services...................................... 3,469 3,469 3,469
Office equipment (cost $52,506; accumulated
depreciation $23,493, $33,320 and $35,092).......... 29,013 19,186 17,414
Organization costs (net of accumulated
amortization)....................................... 782 446 446
Accounts receivable................................... -- 7,445 1,636
Stock subscriptions receivable........................ 53,000 -- --
----------- ----------- -----------
TOTAL ASSETS..................................... $ 238,850 $ 244,862 $ 282,490
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Note payable-stockholder............................ $ 1,554,027 $ 1,554,027 $ 1,554,027
Accrued interest.................................... 290,518 375,069 395,833
Accrued expenses.................................... 37,841 65,284 34,415
Loans from stockholders............................. -- 328,000 511,470
CONTINGENT LIABILITIES -- Collective Bargaining
Agreement (Note 3).................................. -- -- --
LEASE COMMITMENTS--(Note 15).......................... -- -- --
----------- ----------- -----------
TOTAL LIABILITIES................................ 1,882,386 2,322,380 2,495,745
EQUITY SECURITIES SUBJECT TO RESCISSION (Note 20)..... 913,599 1,003,100 1,003,100
STOCKHOLDERS' EQUITY
Common stock -- par value $.002 in 1997 and 1998;
150,000,000 shares authorized; 31,028,500 and
31,057,001 shares issued and outstanding in 1997
and 1998 respectively............................ 61,077 61,077 61,077
Common stock warrants............................... 5,000,000 5,000,000 5,000,000
Preferred stock -- A - par value $.0001 in 1997 and
1998; 10,000,000 shares authorized, issued and
outstanding in 1997 and 1998..................... 1,000 1,000 1,000
Preferred stock -- B - no par value in 1996, $.0001
par value in 1997 and 1998; 10,000,000 shares
authorized; 3,825,834 issued and outstanding in
1997 and 1998.................................... 383 383 383
Additional paid-in capital.......................... 1,392,737 1,392,737 1,392,737
Deficit accumulated during development stage........ (1,786,332) (2,309,815) (2,445,552)
Less special distribution to stockholder (Note 3)... (7,226,000) (7,226,000) (7,226,000)
----------- ----------- -----------
TOTAL STOCKHOLDERS' EQUITY....................... (2,557,135) (3,080,618) (3,216,355)
----------- ----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY....... $ 238,850 $ 244,862 $ 282,490
=========== =========== ===========
</TABLE>

The accompanying notes are an integral part of these financial statements.
F-3
<PAGE> 27

STUDIO CITY HOLDING CORPORATION AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
CUMULATIVE FOR THE YEAR ENDED (UNAUDITED)
FROM INCEPTION DECEMBER 31, FOR THE THREE
OCTOBER 21, 1991 --------------------- MONTHS ENDED
TO MARCH 31, 1999 1997 1998 MARCH 31, 1999
----------------- --------- --------- --------------
<S> <C> <C> <C> <C>
INCOME................................... $ 286,168 $ 15,693 $ 66,026 $ --
EXPENSES
Accounting fees........................ 115,380 24,209 36,406 3,150
Advertising............................ 15,792 236
Amortization -- organization costs..... 1,537 342 329
Auto expenses.......................... 168,459 24,712 13,988 5,814
Bad debts.............................. 167,695
Bank charges........................... 1,391 513 249
Commissions............................ 36,906
Consulting fees........................ 130,512 19,506 11,098 6,968
Contributions.......................... 951 724
Depreciation........................... 35,093 5,520 9,829 1,772
Dues and publications.................. 16,562 3,986 3,854 192
Equipment rental....................... 247,201 80,058 102,702 21,991
Insurance.............................. 23,414 8,367 217
Interest............................... 662,986 139,862 150,516 44,329
Legal fees............................. 223,923 66,180 101,564 25,903
Licenses............................... 23,918 3,212 4,432 2,383
Meals.................................. 27,444 2,654 2,115 527
Medical reimbursement -- officer....... 14,161 5,644
Miscellaneous expenses................. 42,467 8,485 12,622 1,070
Offering costs......................... 32,051 32,051
Office expenses........................ 128,351 15,746 12,222 5,989
Officer compensation................... 5,000
Postage................................ 51,887 11,363 8,760 1,330
Professional fees...................... 86,111 25,382
Project costs.......................... 175,632 85,833 78,380 11,419
Rent................................... 132,974 14,358 15,267 1,500
Repairs and maintenance................ 1,240 1,026 214
Seminars............................... 604
Telephone expense...................... 75,380 8,340 8,704 572
Travel................................. 52,801 4,435 4,655
Utilities.............................. 19,980 3,598 3,706 365
Wages.................................. 13,917
----------- --------- --------- ---------
TOTAL EXPENSES........................... 2,731,720 588,199 589,509 135,737
----------- --------- --------- ---------
NET LOSS................................. $(2,445,552) $(572,506) $(523,483) $(135,737)
=========== ========= ========= =========
EARNINGS (LOSS) PER COMMON SHARE
(Basic and Diluted Loss Per Share are
the same -- See Note 2) $ (0.0178) $ (0.0185) $ (0.0168) $ (0.0044)
=========== ========= ========= =========
</TABLE>

The accompanying notes are an integral part of these financial statements.
F-4
<PAGE> 28

STUDIO CITY HOLDING CORPORATION AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK
-------------------------------------------------
ADDITIONAL COMMON
COMMON PAID-IN STOCK PREFERRED PREFERRED
SHARES AMOUNT CAPITAL WARRANTS STOCK A STOCK B
------------ -------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Issuance of common stock......................... 748,000 $ 11,920 $1,138,500 $ -- $ -- $ --
Special distribution (Note 3)....................
Common shareholder loss for period October 21,
1991 to December 31, 1991.......................
------------ -------- ---------- ---------- ------ ---------
Balance at December 31, 1991..................... 748,000 11,920 1,138,500 -- -- --
Issuance of common stock......................... 610,201 1,662 72,770
Common shareholder loss for year ended December
31, 1992........................................
------------ -------- ---------- ---------- ------ ---------
Balance at December 31, 1992..................... 1,358,201 13,582 1,211,270 -- -- --
Stock split 1 to 100............................. 134,461,899
Shares for properties............................ (1,151,004)
Special distribution (Note 3)....................
Issuance of common and preferred stock and common
warrants........................................ 16,749,900 1,675 56,976 5,000,000 671,974
Common shareholder loss for year ended December
31, 1993........................................
------------ -------- ---------- ---------- ------ ---------
Balance at December 31, 1993..................... 152,570,000 15,257 117,242 5,000,000 -- 671,974
Issuance of common stock......................... (13,420,000) (1,342) 242,670
Common shareholder loss for year ended December
31, 1994........................................
------------ -------- ---------- ---------- ------ ---------
Balance at December 31, 1994..................... 139,150,000 13,915 359,912 5,000,000 -- 671,974
Issuance of common stock......................... 4,150,000 415 406,095
Common shareholder loss for year ended December
31, 1995........................................
------------ -------- ---------- ---------- ------ ---------
Balance at December 31, 1995..................... 143,300,000 14,330 766,007 5,000,000 -- 671,974
Issuance of common stock......................... 6,700,000 670 431,506
Equity securities subject to rescission (Note
20)............................................. (670) (431,506)
Common shareholder loss for year ended December
31, 1996........................................
------------ -------- ---------- ---------- ------ ---------
Balance at December 31, 1996..................... 150,000,000 14,330 766,007 5,000,000 -- 671,974
Issuance of common stock......................... 155,000 310 481,113
Equity securities subject to rescission (Note
20)............................................. (310) (481,113)
Common shareholder loss for year ended December
31, 1997........................................
Shares issued, exchanged or converted............ (119,126,500) (11,000) 9,000 1,000 1,182
Merger adjustments............................... 57,747 617,730 (672,773)
------------ -------- ---------- ---------- ------ ---------
Balance at December 31, 1997..................... 31,028,500 61,077 1,392,737 5,000,000 1,000 383
Issuance of common stock......................... 28,501 57 89,444
Equity securities subject to rescission (Note
20)............................................. (57) (89,444)
Common shareholder loss for year ended December
31, 1998........................................
------------ -------- ---------- ---------- ------ ---------
Balance at December 31, 1998..................... 31,057,001 61,077 1,392,737 5,000,000 1,000 383
Common shareholder loss for three months ended
March 31, 1999 (Unaudited)......................
------------ -------- ---------- ---------- ------ ---------
Balance at March 31, 1999........................ 31,057,001 $ 61,077 $1,392,737 $5,000,000 $1,000 $ 383
============ ======== ========== ========== ====== =========

<CAPTION>
DEFICIT
ACCUMULATED SPECIAL
DURING DISTRIBUTION TOTAL
DEVELOPMENT TO STOCKHOLDERS'
STAGE STOCKHOLDER EQUITY
----------- ------------ -------------
<S> <C> <C> <C>
Issuance of common stock......................... $ -- $ -- $ 1,150,420
Special distribution (Note 3).................... (1,150,000) (1,150,000)
Common shareholder loss for period October 21,
1991 to December 31, 1991....................... (35,455) (35,455)
----------- ----------- -----------
Balance at December 31, 1991..................... (35,455) (1,150,000) (35,035)
Issuance of common stock......................... 74,432
Common shareholder loss for year ended December
31, 1992........................................ (57,999) (57,999)
----------- ----------- -----------
Balance at December 31, 1992..................... (93,454) (1,150,000) (18,602)
Stock split 1 to 100.............................
Shares for properties............................ (1,151,004)
Special distribution (Note 3).................... (6,076,000) (6,076,000)
Issuance of common and preferred stock and common
warrants........................................ 5,730,625
Common shareholder loss for year ended December
31, 1993........................................ (73,409) (73,409)
----------- ----------- -----------
Balance at December 31, 1993..................... (166,863) (7,226,000) (1,588,390)
Issuance of common stock......................... 241,328
Common shareholder loss for year ended December
31, 1994........................................ (172,174) (172,174)
----------- ----------- -----------
Balance at December 31, 1994..................... (339,037) (7,226,000) (1,519,236)
Issuance of common stock......................... 406,510
Common shareholder loss for year ended December
31, 1995........................................ (316,578) (316,578)
----------- ----------- -----------
Balance at December 31, 1995..................... (655,615) (7,226,000) (1,429,304)
Issuance of common stock......................... 432,176
Equity securities subject to rescission (Note
20)............................................. (432,176)
Common shareholder loss for year ended December
31, 1996........................................ (558,211) (558,211)
----------- ----------- -----------
Balance at December 31, 1996..................... (1,213,826) (7,226,000) (1,987,515)
Issuance of common stock......................... 481,423
Equity securities subject to rescission (Note
20)............................................. (481,423)
Common shareholder loss for year ended December
31, 1997........................................ (572,506) (572,506)
Shares issued, exchanged or converted............ 182
Merger adjustments............................... 2,704
----------- ----------- -----------
Balance at December 31, 1997..................... (1,786,332) (7,226,000) (2,557,135)
Issuance of common stock......................... 89,501
Equity securities subject to rescission (Note
20)............................................. (89,501)
Common shareholder loss for year ended December
31, 1998........................................ (523,483) (523,483)
----------- ----------- -----------
Balance at December 31, 1998..................... (2,309,815) (7,226,000) (3,080,618)
Common shareholder loss for three months ended
March 31, 1999 (Unaudited)...................... (135,737) (135,737)
----------- ----------- -----------
Balance at March 31, 1999........................ $(2,445,552) $(7,226,000) $(3,216,355)
=========== =========== ===========
</TABLE>

The accompanying notes are an integral part of these financial statements.
F-5
<PAGE> 29

STUDIO CITY HOLDING CORPORATION AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
CUMULATIVE FOR THE YEAR ENDED (UNAUDITED)
FROM INCEPTION DECEMBER 31, FOR THE THREE
OCTOBER 21, 1991 --------------------- MONTHS ENDED
TO MARCH 31, 1999 1997 1998 MARCH 31, 1999
----------------- --------- --------- --------------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net loss............................... $(2,445,552) $(572,506) $(523,483) $(135,737)
Amortization and depreciation.......... 36,630 5,862 10,158 1,772
Changes in operating assets and
liabilities:
Increase in prepaid services........ (1,024)
Increase in organizational costs.... (1,860)
Decrease in offering costs.......... 32,051
(Increase) decrease in accounts
receivable........................ (1,636) (7,445) 5,809
(Increase) decrease in stock
subscription...................... (53,000) 50,091
Increase (decrease) in accrued
expenses.......................... 34,415 14,047 27,444 (30,870)
Increase in accrued interest
payable........................... 395,833 96,062 84,551 20,764
Decrease in intangible assets....... 19,750 19,750
----------- --------- --------- ---------
Net cash used in operating activities.... (1,963,444) (457,734) (358,684) (138,262)
INVESTING ACTIVITIES
Investment in CVT Corporation of
America............................. (12,000)
Investment in joint ventures and
stocks.............................. (56,823)
Acquisition of equipment............... (52,506) (8,163)
Acquisition of properties.............. (97,066) (2,605)
----------- --------- --------- ---------
Net cash used in investing activities.... (218,395) (10,768) -- --
FINANCING ACTIVITIES
Borrowings from stockholders........... 584,208 328,000 183,471
Proceeds for issuance of common
stock............................... 1,817,036 480,300 92,414
Repayment of stockholders loans........ (72,738)
Loan to affiliated company............. (21,280)
----------- --------- --------- ---------
Net cash provided by financing
activities............................. 2,307,226 480,300 420,414 183,471
----------- --------- --------- ---------
Cash and cash equivalents -- increase.... 125,387 11,798 61,730 45,209
Cash and cash equivalents -- Beginning... -- 6,650 18,448 80,178
----------- --------- --------- ---------
Cash and cash equivalents -- Ending...... $ 125,387 $ 18,448 $ 80,178 $ 125,387
=========== ========= ========= =========
Supplemental Disclosures of Cash Flow
Information:
Cash paid for interest................. $ 247,136 $ 43,803 $ 55,312 $ 14,202
=========== ========= ========= =========
Noncash financing transaction:
Value of Studio City shares issued
for services...................... $ 3,647 $ 114 $ -- $ --
=========== ========= ========= =========
</TABLE>

The accompanying notes are an integral part of these financial statements.
F-6
<PAGE> 30

STUDIO CITY HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 21, 1991 (INCEPTION) THROUGH MARCH 31, 1999

NOTE 1 -- ORGANIZATION, BACKGROUND INFORMATION AND BASIS
OF PRESENTATION

Organization and Background Information

STUDIO CITY INCORPORATED HOLDING (the Company) was incorporated in the
State of Florida on October 25, 1991 as Studio City Incorporated. Prior to
incorporation, pre-incorporation operations commenced in February of 1991. The
Company is engaged in asset development, business management, production and
post-production studio operation, motion picture studio operation, tourist
attraction operation, the development of motion pictures for theatrical
exhibition, for television (i.e. network, cable, pay-per-view, etc.) and home
video, and in the development, production, and distribution of printed
publications. The Company owns a significant number of intellectual properties
and has a partial interest in other intellectual properties.

FAWNSWORTH INTERNATIONAL PICTURES CORPORATION (FIPC) was incorporated in
the State of Florida on October 21, 1991. Prior to incorporation,
pre-incorporation operations commenced in February of 1991. FIPC is a full
service motion picture and television production and distribution company. As a
result of the stockholders of FIPC receiving 491,150 shares of common stock of
Studio City with a par value of $1.00 in exchange for their ownership in the
shares of FIPC, FIPC became a wholly owned subsidiary of the Company on October
18, 1992. The Company owns 100% of the voting stock of FIPC.

Prior to the stock exchange and transfer, the stockholders of Studio City
Incorporated voted unanimously to increase the amount of common stock authorized
from 1,000,000 shares to 1,500,000 to accommodate the exchange with FIPC
stockholders. The end result was that Studio City, Incorporated became the
parent company of FIPC (a wholly owned subsidiary) with both companies being
developmental stage companies. In a unanimous vote of the stockholders of the
Company, it was voted to change the name of the Company to Studio City
Incorporated Holding, which also operated under the name SCI Holding.

In a unanimous vote of its stockholders, the Company was instructed to
execute a stock split to fully dilute the stock of the Company. The 100 to 1
stock split was executed on March 1, 1993. On that date, the total authorized
common stock of 150,000,000 shares includes all of the stock authorized
including 500,000 shares reserved under the Company's Employee Incentive Stock
Option Plan. The common stock of the Company originally had a par value of $1.00
per share and was amended to $.01 per share at the time of the stock split.
Subsequent to the stock split, the par value has again been amended to reflect
the par value at $.0001 per share, and this is the par value per share for each
of the subsidiaries subsequently formed.

Realizing the necessity for expansion, the Company created another
subsidiary, POC-IT PUBLISHERS, INCORPORATED (Poc-It). Poc-It was incorporated in
the State of Florida on May 3, 1993. The Company owns 100% of the voting stock.
This subsidiary was created to assemble, acquire, produce and publish various
literary properties owned by Studio City Incorporated Holding.

On December 14, 1993, the Company entered into an agreement to acquire
77.5% of CVT CORPORATION OF AMERICA (CVT), an inactive New York based public
company. The cost of the stock was $12,000 plus the Company assumed certain
debts. The purpose of this acquisition was as follows: (i) to reactivate the
operations of CVT after a subsequent reorganization, (ii) prepare CVT for a
merger, (iii) merge the Company into CVT, thus becoming Studio City Holding
Corporation, a New York public company, (iv) prepare the merged entity for SEC
and NASD registration, and (v) prepare the merged entity for a Secondary
Offering.

The Company and its subsidiaries are in the developmental stage and have
not generated significant revenues. In addition, the development of commercial
products using the Company's proprietary technology

F-7
<PAGE> 31
STUDIO CITY HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 21, 1991 (INCEPTION) THROUGH MARCH 31, 1999 -- CONTINUED

NOTE 1 -- ORGANIZATION, BACKGROUND INFORMATION AND BASIS
OF PRESENTATION -- CONTINUED
and inventory of intellectual properties have not been completed and will
require significant additional financing. There is no assurance that
commercially successful products will be developed and that the Company will
achieve a profitable level of operations.

Realizing the necessity to develop certain intellectual properties and
assets through the expansion of operations, the Company created six subsidiaries
in 1994. They are as follows:

The Company formed POC-IT COMICS, INCORPORATED on March 29, 1994 as a
Florida corporation. The Company owns 96.93% of the voting stock. Poc-It Comics
has three comic book franchises for development -- "THE EARTH WARRIORS" created
by Larry Faw; "MAGNET MAN" created by Paul Piterski; and "SHADOW RAVEN" created
by Frank Zanca. Poc-It Comics owns literary properties, as well as character
artwork. The first comic book -- SHADOW RAVEN PREMIER EDITION was distributed in
May 1995.

The Company formed ZWEIG KNIGHTS PUBLISHING CORPORATION on March 29, 1994
as a Florida corporation. The Company owns 64.30% of the voting stock. Zweig
Knights Publishing owns twenty six literary properties for future development
and publication. On November 11, 1997, Zweig Knights published its first in a
series of "Limited First Editions", The Nicholas Stories: The Boy With A Wish.
The second book of The Nicholas Stories series, The First Flight of St.
Nicholas, is scheduled for release on November 1, 1998, and the third book in
the series, The Maiden Voyage of Kris Kringle, is scheduled for release on
October 1, 1999. An animated television special of The Nicholas Stories: A
Holiday Classic is currently in pre-production.

The Company formed THE INTERNATIONAL CHILDREN'S TELEVISION NETWORK,
INCORPORATED on April 14, 1994 as a Florida corporation. The Company owns 99.96%
of the voting stock. The International Children's Television Network has fifteen
literary properties, which is the equivalent of twelve hours of children's
programming.

The Company formed STUDIO CITY AMUSEMENTS, INC. on November 10, 1994 as a
Florida corporation. The Company owns 100% of the voting stock. Studio City
Amusements owns two theatrical musical productions entitled "SLICING UP THE BIG
APPLE" and "TINTYPES ON AN INTERGALACTICAL STAGE". Studio City Amusements
purpose is to develop and manage entertainment properties, and to develop and
produce Specialty Entertainment Projects.

The Company formed NON-EXISTENT MAJOR LEAGUE FANTASY SPORTS ASSOCIATION,
INCORPORATED on November 10, 1994 as a Florida corporation. The Company owns
100% of the voting stock. Non-Existent Major League Fantasy Sports Association
owns "The 1994 Fan's Choice Fantasy World Championship of Baseball", the first
in a series of interactive radio and television fantasy sporting events. This
satirical 12 hour long radio play of a "fantasy world series of baseball" was
completed December 1, 1994 and is now ready for radio broadcast and/or
distribution.

The Company formed ZINGRR N-2-AKTIV TELEVISION NETWORK, INC. on November
22, 1994 as a Florida corporation. The Company owns 94.95% of the voting stock.
Zingrr N-2-Aktiv was created to serve as a partner in development, creation,
maintenance and programming of FCC Licensed Wireless Cable Stations and Systems.

The following seven subsidiaries were formed subsequently for the purposes
of diversification and expansion. They are as follows:

The Company formed QUAGGA ENTERTAINMENT CORPORATION on March 30, 1995 as a
Florida corporation. The Company owns 93.33% of the voting stock. Quagga is in
the development stage and is engaged in the exploitation of motion picture and
television properties including the creation of revenue streams and profits

F-8
<PAGE> 32
STUDIO CITY HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 21, 1991 (INCEPTION) THROUGH MARCH 31, 1999 -- CONTINUED

NOTE 1 -- ORGANIZATION, BACKGROUND INFORMATION AND BASIS
OF PRESENTATION -- CONTINUED
from captive intellectual and franchiseable properties. These activities would
include creating products for television, theatrical release, spin-off book
products, and ancillary spin-offs.

The Company formed ACCINEMATRON RELEASING CORPORATION on September 13, 1995
as a Florida corporation. The Company owns 100% of the voting stock.
Accinematron was created to coordinate the distribution of various product lines
which include films, television programming, videocassettes, audio products, and
ancillary merchandise.

The Company formed THE MAGIC SHOP, INC. on October 7, 1995 as a Florida
corporation. The Company owns 100% of the voting stock. The Magic Shop was
created to serve as a production center and business incubator for entertainment
related companies.

The Company formed ZOLLIPE CYBERSPACE CORPORATION on June 14, 1996 as a
Florida corporation. The Company owns 100% of the voting stock. Zollipe was
created to develop computer programming and software for interactive games and
information from both the CD-ROM platform and worldwide web.

The Company formed ZZOONZUIT, INC. on June 14, 1996 as a Florida
corporation. The Company owns 100% of the voting stock. Zzoonzuit was created to
design and manufacture a new line of beachwear, swimwear, and athletic clothing.

The Company formed XENOMORPH DIGITAL POST, INC. on June 14, 1996 as a
Florida corporation. The Company owns 100% of the voting stock. Xenomorph was
created to be a digital broadcast and video post-production center and on-line
producer of television programming.

The Company formed PRO-SPORTS ENTERTAINMENT GROUP, INC. on November 1, 1996
as a Florida corporation. The Company owns 100% of the voting stock. Pro-sports
was created as a motion picture and television production group to produce
entertainment products focused on minority role models.

Basis of Presentation

The consolidated financial statements include the accounts of Studio City
Holding Corporation, and all subsidiaries. All significant intercompany accounts
and transactions have been eliminated.

These consolidated financial statements have been prepared to comply with
disclosure requirements of Securities and Exchange Commission Regulation S-X and
conform to S-B format.

NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES

Cash and Cash Equivalents: The Company considers all highly liquid
investments with a maturity of three months or less when purchased to be cash
equivalents.

Office Furniture and Equipment: Office furniture and equipment is stated
on the basis of cost. Depreciation is computed by the straight-line method over
useful lives of 5-10 years.

Organization Costs: Costs to organize the corporations have been
capitalized and are stated on the basis of cost. Amortization is computed by the
straight-line method over 60 months.

Offering Costs: As discussed in Note 16, Quagga incurred specific
incremental costs in connection with a proposed Securities Act of 1993
Regulation D-504 offering. These offering costs were expensed in 1997 due to the
expiration of the offering on April 12, 1997.

Use of Estimates: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that effect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the date of
the financial

F-9
<PAGE> 33
STUDIO CITY HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 21, 1991 (INCEPTION) THROUGH MARCH 31, 1999 -- CONTINUED

NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES -- CONTINUED
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Earnings (Loss) Per Common Share: Basic Earnings (Loss) Per Share is
computed by dividing income available to common stockholders by the weighted
average number of common shares outstanding during the year. Diluted Earnings
(Loss) Per Share is computed the same as Basic but also giving effect to all
dilutive potential common shares such as options, warrants and convertible
preferred stock. However, the computation of Diluted Earnings (Loss) Per Share
does not assume conversion of any potential common shares if that has an
antidilutive effect on earnings per share. Since there is a loss from
operations, Diluted Earnings (Loss) Per Share is computed the same as Basic
Earnings (Loss) Per Share. This is computed by dividing the net loss by weighted
average number of common shares outstanding during the year. The Earnings (Loss)
Per Share are as follows:

<TABLE>
<CAPTION>
YEAR NET LOSS WEIGHTED AVERAGE SHARES LOSS PER SHARE
---- -------- ----------------------- --------------
<S> <C> <C> <C>
1999..................................... $135,737 31,057,001 $(.0044)
1998..................................... $523,483 31,042,751 $(.0168)
1997..................................... $572,506 30,950,955 $(.0185)
1996..................................... $558,211 146,650,000 $(.0038)
1995..................................... $316,578 141,225,000 $(.0022)
1994..................................... $172,174 145,703,500 $(.0012)
1993..................................... $ 73,409 144,038,550 $(.0005)
1992..................................... $ 57,999 1,071,101 $(.0541)
1991..................................... $ 35,455 784,000 $(.0452)
</TABLE>

NOTE 3 -- INTANGIBLE ASSETS AND RELATED OBLIGATIONS

Intangible assets consists of ownership of and rights to a significant
number of literary properties.

In October 1991, the date of incorporation of the Company and FIPC, stock
was issued to Larry D. Faw for rights to several literary properties. 750,000
shares of Studio City Incorporated Holding stock and 400,000 shares of
Fawnsworth International Pictures Corporation were issued at $1.00 per share in
exchange for property rights and exploitation. The recorded amount of these
intangible assets for the years 1991 and 1992 was zero based on the
predecessor's cost. Larry D. Faw, majority stockholder, was the predecessor
owner. The total price of $1,150,000 has been reflected in the 1991 and 1992
financial statements as a reduction in equity, specifically as a special
distribution to stockholder.

Purchase Agreement: On February 16, 1993, the Company entered into an
agreement with Larry D. Faw to acquire the direct ownership of various
intellectual properties in the amount of $7,226,000, which included 72 motion
picture properties, 4 television pilot properties, 48 books for publication, 4
inventions, 1 franchise program and 1 Specialty Product Design and marketing
program. The Company's Purchase Agreement for these properties included an
obligation in the form of a promissory demand note in the amount of $1,554,027
payable to Larry D. Faw, the majority stockholder. In addition, the Company
granted to Larry D. Faw warrants with the option to purchase 5,000,000 shares of
common stock, which was considered to be partial payment under the Purchase
Agreement. These warrants are exercisable at $1.00 per share at a maximum of 25%
per year beginning the first anniversary of the effective date of the grant and
continues until one of the following occurs: (i) to the year 2003, or, (ii) when
all warrants have been exercised, or, (iii) all rights to such warrants have
been terminated in a mutually agreed upon written agreement.

The Purchase Agreement additionally provided for the requirement that 51%
of the Company's preferred stock be issued to Larry D. Faw. The amount of
preferred stock was later decreased to 1,000,000 shares of

F-10
<PAGE> 34
STUDIO CITY HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 21, 1991 (INCEPTION) THROUGH MARCH 31, 1999 -- CONTINUED

NOTE 3 -- INTANGIBLE ASSETS AND RELATED OBLIGATIONS -- CONTINUED
redeemable convertible and callable preferred B stock, with each share of
preferred stock being entitled to noncumulative dividends at 6% annual rate upon
declaration of the Board of Directors.

The preferred stock was recorded in the amount of $671,973, which was the
purchase price of the assets less the amount attributed to the promissory demand
note and the common stock warrants.

The Company, as part of the Purchase Agreement issued 1,000,000 shares of
its preferred B stock on February 15, 1995. The preferred stock can be converted
to common stock at market price, or, callable at any time by the Company at a
fixed price of $50 per share for preferred B stock and $105 per share for
preferred A stock, or in parts, on or after February 16, 1996, and will be
redeemable and/or callable until February 16, 2006.

In summary, the Purchase Agreement includes the $1,554,027 promissory
demand note, the $5,000,000 common stock warrants and $671,973 value of
preferred stock for a total price of $7,226,000. Management believes this
Purchase Agreement was at a significant discount. As previously stated, the
recorded amount of these intangible assets was zero based on the predecessor's
cost. Larry D. Faw, the majority stockholder, was the predecessor owner. The
total price of $7,226,000 has been reflected in the 1993 through 1998 financial
statements as a reduction in equity, specifically as a special distribution to
stockholder.

Contingent Liabilities-Collective Bargaining Agreement: Studio City
Holding Corporation, Fawnsworth International Pictures Corporation, the
International Children's Television Network, Incorporated, and Zingrr N-2-Aktiv
Television Network, Inc. are registered signatory companies to the 1995 Writer's
Guild of America-Alliance of Motion Picture & Television Producers Theatrical
and Television Basis Agreement ("MBA"), Amended and Effective May 2, 1995
through May 1, 1998. Studio City Holding Corporation and its subsidiaries are
exclusively represented by the Alliance of Motion Picture & Television
Producers, Inc. The collective bargaining agreement is under the auspices of the
National Labor Relations Board and is deemed to be a contingent liability for
Studio City Holding Corporation and its subsidiaries in regards to all literary
properties owned by the companies for development and/or sale. All aspects of
intellectual properties represented by the "MBA" have been tabulated and have
pre-set financial obligations that pass through to the Company and/or other type
of ownership, and, directly passes through to any and all purchasers of the
intellectual properties. The contingent liabilities, requisite costs, and
expense calculations as determined under the 1995 "MBA" are restrictive and
compliance is dictated by law.

NOTE 4 -- INVESTMENT IN JOINT VENTURE AND STOCK

The Companies currently own (in entirety) literary properties whose
"replacement cost/value" and/or "1995 Minimum Basic Agreements" contingent
liabilities/obligation and/or associated direct pass-through costs for
production and distribution are tabulated under the Agreement as of December 31,
1996 as $811,931 per intellectual property. Studio City Holding Corporation and
its subsidiaries current portfolio of intellectual properties are required to
comply with all of the aspects pertaining to the collective bargaining agreement
in its most current form, and, those contingent liabilities pass through to the
owner of record.

This investment represents costs of $6,823 paid by FIPC on behalf of
Florida Screen Gems Partners, a partnership of which the FIPC is a partner. The
Partnership is in the development stage. The Company has also invested in two
Corporations -- Environmental Production Systems and Florida Film Investment
Company. These investments are recorded at cost for a total of $50,000.

NOTE 5 -- PREPAID SERVICES

The Company and FIPC issued common stock to several individuals in exchange
for future services and expertise. The asset values recorded were determined by
management.

F-11
<PAGE> 35
STUDIO CITY HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 21, 1991 (INCEPTION) THROUGH MARCH 31, 1999 -- CONTINUED

NOTE 6 -- OFFICE FURNITURE AND EQUIPMENT AND NOTE PAYABLE-STOCKHOLDER

At the time of incorporation in October 1991, FIPC acquired office
furniture and equipment from a stockholder, Genevieve Faw in the amount of
$13,600. The Company became indebted for this amount plus $1,520 for supplies
that was expensed in 1991. Therefore, the total liability to the stockholder for
this transaction was $15,120 since 1991. In 1994 the liability was satisfied.

F-12
<PAGE> 36
STUDIO CITY HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 21, 1991 (INCEPTION) THROUGH MARCH 31, 1999 -- CONTINUED

NOTE 6 -- OFFICE FURNITURE AND EQUIPMENT AND NOTE PAYABLE-STOCKHOLDER --
CONTINUED
In 1995, the Company and Poc-It Comics acquired office furniture and
equipment. In 1996 and 1997, the Company acquired additional office furniture
and equipment. Office furniture and equipment is recorded at cost, less
accumulated depreciation. The provision for depreciation is computed on the
straight-line method over the estimated useful lives of the assets which range
from 5 to 7 years.

NOTE 7 -- NOTE PAYABLE-STOCKHOLDER

As discussed in Note 3 above, the Company became obligated under the
Purchase Agreement to its majority stockholder, Larry D. Faw. The promissory
demand note is dated the date of the Purchase Agreement, which is February 16,
1993. The promissory demand note contains the following provisions: (i) due upon
demand, (ii) payments may be made at any time, and (iii) a balloon payment is
due on February 16, 1995. The note has an initial annual interest rate of 2%. On
February 16, 1995, the note became due and subsequently was extended for six
months at an annual interest rate of 9%. Since August 16, 1995, the note has
been extended seven times through August 16, 1999. No principal payments have
been made on this note, but partial interest payments have been made in 1995,
1996, 1997, 1998 and 1999. Accrued interest on this note was $395,833 as of
March 31, 1999, and $375,069, $290,518, $194,456, $108,593, $58,158 and $27,078
as of December 31, 1998, 1997, 1996, 1995, 1994 and 1993 respectively.

NOTE 8 -- RELATED PARTY TRANSACTIONS

In February of 1991, both the Company and FIPC started incurring
pre-incorporation expenses that were expensed by the companies and were paid by
its majority stockholder, Larry D. Faw. This practice has continued through the
present and both companies have reimbursed the stockholder for these expenses.

The nature of these expenses were automobile expense, office rent expense,
telephone expense, office supplies expense and other operational expenses. These
expenses were corporate expenses that were paid by the majority stockholder,
Larry D. Faw and charged to the companies. The Company incurred automobile
expenses and reimbursed Larry D. Faw at the mileage rates as prescribed by the
Internal Revenue Service. Additionally, the Company incurred office rent and
utilities and reimbursed Larry D. Faw $500 and $84 per month respectively.
Additional expenses were incurred and reimbursed to Larry D. Faw such as
telephone expenses, office supplies, and other operational expenses.

As discussed in Note 3, the Company acquired various intellectual
properties from the majority stockholder, Larry D. Faw, for $7,226,000 in
exchange for a promissory demand note, preferred stock and warrants to purchase
common stock at a fixed price.

The Company executed a statutory merger with CVT Corporation of America
(name changed to Studio City Holding Corporation) on July 1, 1996 with Studio
City Holding Corporation (a New York Corporation) being the surviving entity.
Subsequently, the operations of Studio City Incorporated Holding (a Florida
Corporation) were wound up and the corporation dissolved. (See Note
17 -- Merger).

NOTE 9 -- STOCKHOLDERS' EQUITY

Common Stock and Preferred Stock

Studio City Holding Corporation immediately after the Merger and as of
December 31, 1996 (See Note 17) had 150,000,000 shares authorized, issued and
outstanding with a par value of $.01 per share. Upon the Merger, Larry D. Faw,
the principal stockholder converted 100,000,000 shares of common stock into
10,000,000 shares of Class A Preferred Stock and 10,000,000 shares of common
stock into 1,000,000 shares of Class B Preferred Stock. Additionally, the former
stockholders of CVT exchanged their shares for 9,123,250 shares of common stock.
Additionally, some shareholders elected the option to exchange their common
shares

F-13
<PAGE> 37
STUDIO CITY HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 21, 1991 (INCEPTION) THROUGH MARCH 31, 1999 -- CONTINUED

NOTE 9 -- STOCKHOLDERS' EQUITY -- CONTINUED
for Class B Preferred Stock (10 shares of common for 1 share of Class B
Preferred Stock). 18,258,340 shares of common stock were exchanged for 1,825,834
shares of Class B Preferred Stock. Additional shares of common were issued
during 1997 and 1998. There were 31,057,001 shares issued and outstanding as of
March 31, 1999 and December 31, 1998, and 31,028,500 shares issued and
outstanding as of December 31, 1997. The par value was amended to $.002 per
share.

As discussed above, Larry D. Faw, the principal stockholder, converted
common stock into 10,000,000 shares of Class A Preferred Stock. This is the
amount of shares issued and outstanding as of March 31, 1999 and December 31,
1998 and 1997. The par value is $.0001 per share.

As discussed above, Larry D. Faw, the principal stockholder, converted
common stock into 1,000,000 shares of Class B Preferred Stock. He previously had
1,000,000 shares prior to this conversion. Additionally, other stockholders
exchanged common stock for 1,825,834 shares of Class B Preferred Stock. As of
March 31, 1999 and December 31, 1998 and 1997, there were 3,825,834 shares
issued and outstanding. The par value is $.0001 per share.

Fawnsworth International Pictures Corporation has 500,000 shares
authorized. The par value is $.01 per share. There were 491,150 shares issued
and outstanding as of March 31, 1999 and December 31, 1998 and 1997 with Studio
City being the registered beneficial owner.

Poc-It Publishers, Incorporated has 10,000,000 shares authorized, issued
and outstanding. The par value is $.0001 per share.

Poc-It Comics, Incorporated has one class of common stock and it is voting
(one share, one vote). The par value is $.0001 per share with 10,000,000
authorized. 10,000,000 shares are issued and outstanding. Poc-It Comics has
5,000,000 shares authorized, issued and outstanding of Class A Preferred Stock
at $.0001 par value per share which is callable, voting and convertible to
common. There are also 5,000,000 shares authorized, issued and outstanding Class
B Preferred Stock at $.0001 par value per share which is non-voting with
preferential dividends.

Quagga Entertainment Corporation has one class of common stock and it is
voting (one share, one vote). The par value is $.001 per share with 10,000,000
shares authorized and 7,000,000 shares issued and outstanding. Quagga has
5,000,000 shares of Class A Preferred Stock authorized, issued, and outstanding.
The par value of the Class A shares is zero. The Class A shares (1) are
voting -- one share, one vote (2) receive no dividends (3) are not convertible (
4) are not redeemable (5) are callable at $25.00 per share.

Quagga has 5,000,000 shares of Class B Preferred Stock of which 2,500,000
are issued and outstanding. The par value of the Class B shares is zero. The
Class B shares (1) are non-voting (2) have special dividend rights based on
earnings (3) have the initial price of $6.00 (4) have a fixed dividend of 12%
per annum based on earnings (5) are callable at $7.50 per share after the first
year's dividend (6) are callable after 3 years at $10.00 per share (7) are
convertible to common (8) have preferential liquidation treatment above all
other shares. Additionally, Quagga has 500,000 shares of Class C Preferred
Stock, however, no shares have been issued. The par value of the Class C shares
is zero. The Class C shares (1) are non-voting (2) have special dividend rights
based on earnings (3) have the initial price of $2.00 (4) are callable any time
after issuance for $2.00 for a period up to two years (5) are callable for $2.50
after two years (6) are convertible to common after three years on a one to one
basis (7) have preferential liquidation treatment over common stock and Class A
Preferred stock.

All other entities presented in these financial statements other than those
referred to above in this note, have one class of common stock and it is voting
(one share, one vote). The par value is $.0001 per share with 10,000,000
authorized, issued and outstanding. There are 5,000,000 shares authorized,
issued and outstanding

F-14
<PAGE> 38
STUDIO CITY HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 21, 1991 (INCEPTION) THROUGH MARCH 31, 1999 -- CONTINUED

NOTE 9 -- STOCKHOLDERS' EQUITY -- CONTINUED
each of Class A and B Preferred Stock at $.0001 par value per share. Class A is
voting and convertible to common and Class B is non-voting with preferential
dividends.

NOTE 10 -- TRADEMARKS, COPYRIGHTS AND LICENSES

The Company uses its own and licensed trademarks from its subsidiaries for
spinoff product development and merchandising from its various intellectual
properties. The Company owns 126 copyrights and will seek patents for 4
products. Additionally, the Company will be purchasing new products and literary
properties for development, and/or, enter into joint ventures for the
development of intellectual properties or consumer products. Each such instance
will be earmarked by distinct contractual requirements and obligations by the
Company.

NOTE 11 -- EMPLOYEES, EMPLOYMENT AGREEMENTS AND EMPLOYEE BENEFITS

The Company has had no full-time employees from inception to date except
for Quagga Entertainment Corporation during 1995. The Company has had
contractual relationships with independent contractors. Operations are managed
by officers, directors, and stockholders who receive no monetary compensation.
The Company has had no employment agreements with key officers from inception to
date. However, the Company anticipates entering into employment agreements with
key personnel and intends to obtain key-man insurance when the Company emerges
from the development stage.

The Company does maintain a medical reimbursement plan whereby the majority
stockholder, Larry D. Faw, is reimbursed for his medical costs. This does not
include any other family members.

NOTE 12 -- ADDITIONAL CONTINGENT PAYMENTS

As of March 31, 1999, the Company was obligated to make future contingent
payments under research and development contracts, which are based upon actual
utilization of certain intellectual properties in pre-publication, published or
cinematic form. These contingent payments will continue for an indeterminable
length of time, and will be payable in all cases at the time of funding for each
respective project. Under certain of these contracts, the Company is obligated
to pay royalties ranging from 1.5% to 5% of the gross net profits which are
distributable from the commercialization and merchandising of these properties.

The Company has agreements with various individuals who will receive funds
from the initial distribution proceeds from the exploitation of certain literary
properties. These amounts are uncalculable because they are percentage rights in
individual properties which are identified in the Company's unaudited financial
statements and inventory analysis. These contracts and percentage rights are as
follows:

For the motion picture property "Bawdyhouse Bandits":

<TABLE>
<S> <C>
Frederick G. Spriggs 1% profit participation
Norman T. Godheim 1% profit participation
Heflar Family Trust 2% profit participation
Darlene C. Barror 1% profit participation
Suzanne Quinonez 1% profit participation
Genevieve H. Faw 2% profit participation
</TABLE>

For each of the following motion picture properties -- "Return To Treasure
Island", "Bad News", "TampaVice or The Comic Misadventures of Nipit and Budd",
"Mistaken Identity", "Love Can Kill", "Billion Dollar Bunnies", "The Love Bugs",
"A Touch of Evil", "Eyes of Terror", "Rail Rider", "Swingtime", "Whooz Choice",
"The War Lords", "Captain J Ride Again", "Midnight Blues", "Belle of Berry

F-15
<PAGE> 39
STUDIO CITY HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 21, 1991 (INCEPTION) THROUGH MARCH 31, 1999 -- CONTINUED

NOTE 12 -- ADDITIONAL CONTINGENT PAYMENTS -- CONTINUED
Hill", "Hells Revenge", "Vendetta", "A Miracle In Tibet", "The Junkyard Gang",
"Land of the GaNodds", "So Far From My Heart", "Water Drop Series", "Damon
Runyon Series", "Way Off Broadway", "Paparazzi", "Love Bugs-Television Game
Show", "Fright Night", "Fountain Blue", "The Worlds Greatest Escapes", and
"Seminole" -- the following contractual agreements exist: Genevieve H.
Faw -- 2%.

For each of the following motion picture properties under option -- "Cut
Throat Ridge", "The Plunderers", "The Last Glider", "Silence Awaits", "Stihlman
and the Firestone", "The Orion Murders", "Battle of Buck Mountain", "A Delicate
Obsession", "Seven Eleven Sorority Street", "Happy Bob", "Ghost Rider", "Teeth
of Lions", "Dali", "The Hillsville Courthouse Murder Massacre", "The Last Great
Adventure", "Otto", "Wheels", "Freefalling", and "Like A Butterfly"-the
following contractual agreements exist: Genevieve H. Faw -- 1%.

For the following book rights and motion picture rights on "Cain and Abel
Revisited: The True Life Story of Earle Don Fagan, Jr." -- the following
contractual agreement exists:

<TABLE>
<S> <C>
The E. Don Fagan, Jr. Trust....................... $50,000 on contract to sale
$25,000 new purchase
1% net profit participation
</TABLE>

The Company has separate contractual royalty agreements with Genevieve H.
Faw for deferred fees and royalties for each of the following
inventions-- "Enviro Tools"(tm), "Boot Valet"(r), "Book Lounge"(r), and "Radius
Gauge"(r). The following contracts exist: Genevieve H. Faw--1% royalty per
number sold.

The Company has separate contractual agreements for royalties for books
under the research and development phase of the Company's wholly owned
subsidiary, Poc-It Publishers, Incorporated. All of the following book titles in
each series have royalty fees -- "Reward Series" (13 titles), "The Poc-It Mania
Series" (11 titles), "Self Help Manuals" (11 titles), and "Contemporary Career
Guide Series" (10 titles): The following contracts exist: Genevieve H. Faw -- 1%
royalty per number sold.

There are separate contractual agreements in connection with the assignment
of Artistic Property Agreement between Fawnsworth International Pictures
Corporation and Michael Fields for ownership rights of original art for 4 comic
books characters created by Larry D. Faw. These 4 characters are "Taren",
"Mercer", "Shrieve", and "Quant", all from the "Earth Warrior" series. Poc-It
Comics, Incorporated issued 10,000 shares of common stock to Michael Fields in
addition to $100 cash per contract $400 total. Additionally, Fields is to
receive a flat fee of $5,000 for each agreement payable when and if the art
design is utilized in the production of a movie or animation product -- $20,000
total if all character art is utilized.

There is a separate Purchase & Profit Participation Agreement between
Fawnsworth International Pictures Corporation and Paul and Brahm Piterski for
the ownership of the literary rights and artwork of the comic book character
"Willy the Magnet Man". Poc-It Comics, Incorporated issued 50,000 shares of
common stock to Piterski in addition to $100 cash. Additionally, Piterski is to
receive a $15,000 consultant/ production fee at time of movie production plus
10% of the net profits generated from the exploitation of the entertainment
franchise.

There is a separate Agreement between the Company, Roger H. Hefler, Larry
D. Faw and Frank Zanca/ Wingspan Productions for the ownership rights of the
literary property "Shadow Raven", which are assigned to Poc-It Comics,
Incorporated. Poc-It Comics, Incorporated issued 50,000 shares of common stock
and 100,000 shares of Class B preferred stock to Zanca.

There is a separate Assignment of Artistic Property Agreement between
Fawnsworth International Pictures Corporation and Calvin B. Clarke for the
ownership rights of original art for the comic book character created by Larry
D. Faw. The character is "Hafro", another character from the "Earth Warrior"
series. Clarke

F-16
<PAGE> 40
STUDIO CITY HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 21, 1991 (INCEPTION) THROUGH MARCH 31, 1999 -- CONTINUED

NOTE 12 -- ADDITIONAL CONTINGENT PAYMENTS -- CONTINUED
received $100 cash plus he will receive a $5,000 consultant fee if the art is
utilized plus a pro rata percentage from 5% allocated to Talent Pool.

There is a separate Assignment of Artistic Property Agreement between
Fawnsworth International Pictures Corporation and Ricardo Colon for the
ownership rights of original art for the comic book character "Un-named". Colon
received $100 cash plus he will receive a $5,000 consultant fee if the art is
utilized plus a pro rata percentage from 5% allocated to Talent Pool.

There is a separate Assignment of Artistic Property Agreement between
Fawnsworth International Pictures Corporation and Marco Antonio Nazario for the
ownership rights of original art for the comic book character created by Larry
D. Faw. The character is "Sunspot", another character from the "Earth Warrior"
series. Clarke received $100 cash plus he will receive a $5,000 consultant fee
if the art is utilized plus a pro rata percentage from 5% allocated to Talent
Pool.

There is a separate Assignment of Artistic Property Agreement between
Fawnsworth International Pictures Corporation and Melissa Polizzi for the
ownership rights of original art for 3 comic book characters created by Larry D.
Faw. The characters are "Marilise", "Lilian", and "Renata", triplet characters
from the "Earth Warrior" series. Polizzi received $100 cash plus she will
receive a $5,000 consultant fee if the art is utilized plus a pro rata
percentage from 5% allocated to Talent Pool.

There is a separate Assignment of Rights and Profit Participation Agreement
between Fawnsworth International Pictures Corporation and Larry D. Faw for the
licensing rights of the literary property "Earth Warriors", which consists of 12
characters. This Agreement is for a 5 year period ending October 9, 1998. Faw
received no cash but did receive 50,000 shares of Poc-It Comics, Incorporated on
March 29, 1994. If the rights are utilized, Faw will receive $15,000 for print
format, $50,000 for motion picture and/or other multi-media plus 5% of the net
profits attributable to this entertainment franchise.

There is a separate Agreement between the Company and Harry B. Knights, the
author of "The Nicholas Stories", who serves as Senior Vice-President of the
Company and Chief Operations Officer of Zweig Knights Publishing Corporation, a
subsidiary of the Company. The contractual obligation to Harry B. Knights was
met by issuing to him 1,250,000 shares of Preferred A and 1,250,000 of shares of
Preferred B stock of Zweig Knights Publishing Corporation plus 100,000 shares of
restricted common stock of the Company in April 1994. Additionally, Harry B.
Knights received a cash consulting fee of $5,000 on the 1997 production of "The
Nicholas Stories".

There is a separate pass-through Agreement between Harry B. Knights which
is contingent upon the publication and/or cinematic adaptation of any of these
intellectual properties. He is to receive a consultant fee and a profit
participation in each of these properties.

On July 1, 1995, the Company entered into a joint venture with Quagga
Television Partners Limited Partnership for the production and distribution of
low budget motion pictures and television programming. Larry D. Faw is the
Managing Partner of Quagga Television Partners and is the largest contributor as
a limited partner. Quagga Television Partners furnished the majority of the
funding for the production of Zoo Toonz. Quagga Television Partners owns a
library of video footage of exotic animals for the creation of animal music
videos. As of this date, Quagga Television Partners has not licensed use of this
footage.

The Company has entered into a series of Joint Venture Agreements with Lisa
Moody/Tin Woman Music, Inc. for the creation of music for the first generation
of Zoo Toonz. Larry D. Faw and Quagga Television Partners Limited Partnership
have contributed capital for these joint ventures. To date, 5 contractual
arrangements have been made for the creation of 27 songs for the Zoo Toonz
project. The songwriter has been prepaid for the creation of these songs and
separate funds have been expended for the

F-17
<PAGE> 41
STUDIO CITY HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 21, 1991 (INCEPTION) THROUGH MARCH 31, 1999 -- CONTINUED

NOTE 12 -- ADDITIONAL CONTINGENT PAYMENTS -- CONTINUED
production of Recording Masters. A contingent liability passes through to the
Company for any profits associated with the useage of these songs, if the songs
are utilized.

The Company had entered into an Agreement for the use of 2 puppets, Clyde
and Alfred, for the utilization in volume one of Zoo Toonz, with John C.
Cummings, Jr. Additional puppet footage was shot at Disney-MGM Studios, however,
the footage was unacceptable. Due to contractual restrictions placed on the
Company by Disney for Volume one of Zoo Toonz, the release and distribution was
cancelled. The Joint Venture Agreement was terminated by John C. Cummings, Sr.
on October 2, 1996.

A Contingent Production Joint Venture was entered into by the Company with
Marc Rose and Radio Cinema for the creation of various products and merchandise
which could be created from the distribution and cinematic adaptation of a
series of radio shows entitled "Dry Smoke and Whispers". This contingent
agreement may be terminated.

On June 17, 1996, the Company purchased the patents and trademarks for
"Uncle Tuffy's French Security Window". The purchase was made between the
Company and Paul Piterski, the inventor and patent owner for $2,000 in cash plus
5% of the gross profits attributable to the sale, licensing, or other profits
due to the Company for the exploitation of this patented product.

In July 1996, the Company placed a $10,000 option on the right to purchase
literary properties written by science fiction writer Andre Norton. The
properties which were optioned were "The Wraiths of Time" and "A New Property
Adaptation From The Screenplay of The Wraiths of Time". The option still exists,
however, original funding was to be realized from the public offering of Quagga
Entertainment Corporation's D-504, which expired. Publishing Corporation, has
entered into an Agreement to be a corporate general partner in ZK Partners
Limited Partnership. This Partnership is currently being formed for the
financing of an animation for "The Nicholas Stories", and is currently in the
development stage.

NOTE 13 -- EMPLOYEE INCENTIVE STOCK OPTION PLAN

On March 1, 1993, the Board of Directors adopted in Outline Form an
Employee Incentive Stock Option Plan for future full time employees and
officers. Under the Proposed Outline, the Company may issue options exercisable
at the current market value (110% of current market value only to 10% or greater
stockholders) up to $100,000 annually. The Proposed Plan was extended from March
1, 1998, to terminate on March 1, 2002.

Under the Proposed Plan, any person owning 10% of the voting power of the
Company is restricted from exercising his/her options to three years after the
receipt of such grant. Additional stipulations are as follows: (1) options
terminated or expired revert back into the Plan, (2) unpurchased option shares
remain in the Plan, (3) options are only exercisable by the optionee or his/her
estate, (4) options are not transferable, (5) carryover amounts from one year to
the next year can not exceed 50% of the option, and (6) option shares are
restricted until SEC registration.

The Company has reserved 500,000 shares of common stock for issuance under
the Proposed Plan.

No options have been granted under the Proposed Plan from inception to
date.

NOTE 14 -- INCOME TAXES

The Company and its subsidiaries have filed separate corporate income tax
returns since each corporation's inception through December 31, 1998. As of
December 31, 1998, there have been no timing differences in the recognition of
revenue and expense for financial reporting and income tax purposes. As of
December 31, 1998, the Company and its subsidiaries each have available net
operating loss carryforwards for federal and state income tax purposes (which
are the same amount) that will be available to offset future

F-18
<PAGE> 42
STUDIO CITY HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 21, 1991 (INCEPTION) THROUGH MARCH 31, 1999 -- CONTINUED

NOTE 14 -- INCOME TAXES -- CONTINUED
taxable income of the Company. If unused, net operating loss carryforwards
expire after 15 years (20 years after 1997). The loss carryforwards are
summarized as follows:

<TABLE>
<CAPTION>
YEAR LOSS YEAR LOSS CARRYFORWARD
INCURRED EXPIRES AMOUNT
--------- --------- ------------
<S> <C> <C> <C>
Studio City Incorporated Holding...................... 1991 2006 $ 15,596
1992 2007 $ 24,000
1993 2008 $ 63,543
1994 2009 $158,468
1995 2010 $309,995
1996 2011 $496,761
1997 2012 $451,266
1998 2018 $489,105
Fawnsworth International Pictures Corporation......... 1991 2006 $ 19,859
1992 2007 $ 33,999
1993 2008 $ 9,850
1994 2009 $ 5,746
1995 2010 $ 3,815
1996 2011 $ 3,000
1997 2012 $ 1,228
1998 2018 $ 159
Poc-It Publishers, Incorporated....................... 1993 2008 $ 16
1994 2009 $ 7,894
1995 2010 $ 1,221
1996 2011 $ 258
1997 2012 $ 523
1998 2018 $ 167
Other Entities........................................ 1994 2009 $ 66
1995 2010 $ 1,547
1996 2011 $ 57,386
1997 2012 $ 87,038
1998 2018 $ 32,052
</TABLE>

NOTE 15 -- RENTALS UNDER OPERATING LEASES

The Company's leasing operations consist principally of the leasing of
broadcast television equipment, various computer, video and sound equipment
under operating leases that expire over the next three to five years. Due to a
cross default by a joint venture partner, a portion of the equipment under two
of the leases was reposessed by the lessor for late payment (see note 18
regarding "Zoo Toonz"). The Company has continued making monthly payments on all
lease obligations and expects to satisfy all obligations and obtain full use of
all equipment under lease.

F-19
<PAGE> 43
STUDIO CITY HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 21, 1991 (INCEPTION) THROUGH MARCH 31, 1999 -- CONTINUED

NOTE 15 -- RENTALS UNDER OPERATING LEASES -- CONTINUED
The following is a schedule by years of future minimum rental payments
required under operating leases that have initial or remaining noncancelable
lease terms in excess of one year as of December 31, 1998:

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31, AMOUNT
------------------------ --------
<S> <C>
1999........................................................ $ 83,595
2000........................................................ 53,084
2001........................................................ 44,199
2002........................................................ 2,177
Later years................................................. 0
--------
$183,055
--------
</TABLE>

NOTE 16 -- CHANGING ECONOMIC CONDITIONS AND SUBSEQUENT EVENTS

From September 1995 to September 1996 Studio City Incorporated Holding
entered into a "First Right of Refusal/Space Lease Agreement" with The Walt
Disney Company on product produced on the Disney-MGM Studios by Studio City. The
Company entered into a one year space lease/first right of refusal/ production
agreement to expend a minimum of $1,200,000 at the studio for its projects. The
Company entered into this agreement with Disney based on an agreement with a New
York investment banker taking a contractual (dated August 28, 1995) equity
position of $1,200,000 in Quagga Entertainment Corporation, the production arm
which was located with the Company at Disney/MGM Studios. Quagga Entertainment
Corporation was to achieve total capitalization in 1996 of $8,500,000 based on a
registered public offering in Connecticut. The Company was also qualified to
sell the offering in the state of New York as a registered broker/dealer. The
Company was represented by an investment banker/consultant in Connecticut, who
contractually committed to raising Quagga's capital needs through a registered
D-504 offering. Also, the Company had the option to create and market a "red
herring" D-506 private placement. The Company chose "Shadow Raven", a low-budget
feature motion picture, to be the first project. However, due to expanded costs
associated with the contingent joint venture production partners, the project
was postponed until sufficient capitalization was realized. Quagga's D-504
offering was registered in Connecticut on April 12, 1996. The investment banker
was to commence the financial marketing of the offering, but failed to do so.
The New York equity investor could not meet the contractual commitment. As a
result, the D-504 offering expired on April 12, 1997 and the "red herring" D-506
was withdrawn as a viable funding plan. Accordingly, the offering costs of
$32,051 have been expensed during 1997. With the lack of alternative financing
available to the Company, the contract with Walt Disney Company expired on
September 15, 1996 along with the contingent joint venture production
partnerships.

In April 1997, the Company expanded its operations by relocating to Tampa,
Florida into a facility which provides a small soundstage, office operations,
and edit suite. This new organization of its operations in Tampa is anticipated
to increase revenue production, while providing low costs to the Company for its
own projects.

NOTE 17 -- MERGER

On June 29, 1996, CVT Corporation of America restated and amended its
articles of incorporation to allow for a name change, the creation of Class A
and B Preferred Stock, the reorganization of operations, and limiting the
liability of its Directors and Officers. CVT Corporation changed its name to
Studio City Holding Corporation (a New York Corporation). 10,000,000 shares of
Class A Preferred Stock with special voting powers were created and 25,000,000
shares of Class B Preferred Stock with preferential dividends and various rights
were created. The Company adopted a new set of By-Laws which streamlined its
operations as a public company and adopted a set of procedures which limited the
liability of its Directors and Officers.

F-20
<PAGE> 44
STUDIO CITY HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 21, 1991 (INCEPTION) THROUGH MARCH 31, 1999 -- CONTINUED

NOTE 17 -- MERGER -- CONTINUED
On July 1, 1996, Studio City Incorporated Holding (a Florida Corporation)
and its subsidiaries merged with and into Studio City Holding Corporation (a New
York Corporation) in a statutory merger. The merger transaction was executed in
a "like kind" stock exchange, share for share of common stock of Studio City
Incorporated Holding for common stock of Studio City Holding Corporation. On
October 24, 1996, Studio City Incorporated Holding was dissolved, with the
surviving entity being Studio City Holding Corporation. All of the assets and
liabilities of Studio City Incorporated Holding and its subsidiaries were merged
with and into Studio City Holding Corporation.

As per the Merger Agreement, Larry D. Faw, principal stockholder of Studio
City Incorporated Holding, was required to convert 100,000,000 shares of voting
common stock of Studio City Incorporated Holding into 10,000,000 shares of
Studio City Holding Corporation Class A Preferred Stock and was also required to
convert 10,000,000 shares of common stock into 1,000,000 shares of Class B
Preferred Stock.

On October 29, 1997, the Company called for a name change and exchange of
shares from both former CVT stockholders and Studio City Incorporated Holding
stockholders. This exchange was executed in a "like-kind" share for share
exchange. Additionally, all of the stockholders in the Merged Entity had the
option to convert any, all, or none of their shares of common stock into Class B
Preferred Stock at a ratio of 10 shares of common for 1 share of Class B
Preferred Stock.

When the merger occurred, there were no significant changes in the
operations of the Company and its subsidiaries. Studio City Holding Corporation
and its subsidiaries continued its operations as the merged entity.

NOTE 18 -- PENDING LITIGATION

The Company being an entertainment company is often required to defend its
rights and licenses for intellectual properties that the Company either owns or
serves as a joint venture partner. This type of litigation is common in the
entertainment industry, and considering that the Company owns numerous
intellectual properties and owns various types of licenses and joint
participations in intellectual properties, it can safely be assumed that the
Company will be required to defend its rights, presently and in the future.

Currently, the Company and its subsidiary, Poc-It Comics, Incorporated, are
defending their rights in the production and distribution of an entertainment
franchise based on a comic book story entitled "Shadow Raven". The principals
are currently attempting to resolve their issues in negotiation.

Secondly, the Company and its subsidiary, Quagga Entertainment Corporation,
are defending a challenge to the Companies' rights associated with a joint
venture to create, produce, distribute and exploit an intellectual property
entitled "Zoo Toonz", a joint venture where the timeliness of the creation of
finished products are in question. Litigation is pending in this matter, and, it
has been determined that the products will be completed without the assistance
of the joint venture partner. The Company and its financial partners will seek
to recoup all of its investment.

NOTE 19 -- LOANS FROM STOCKHOLDERS

During 1998, various minority stockholders loaned the Company money. These
unsecured, short-term (less than one year) loans accrue interest at 10% per
annum. The total amount outstanding is $511,470 and $328,000 as of March 31,
1999 and December 31, 1998 respectively.

NOTE 20 -- EQUITY SECURITIES SUBJECT TO RESCISSION

Common stock was issued during 1996, 1997 and 1998 without compliance with
registration requirements of the federal and state securities laws. As a result,
these securities may have rescission rights.

F-21
<PAGE> 45
STUDIO CITY HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 21, 1991 (INCEPTION) THROUGH MARCH 31, 1999 -- CONTINUED

NOTE 20 -- EQUITY SECURITIES SUBJECT TO RESCISSION -- CONTINUED
Accordingly, the potential rescission liability has been classified outside of
permanent stockholders' equity, under the caption "Equity Securities Subject To
Rescission". This amount is $432,176 as of December 31, 1996, $913,599 as of
December 31, 1997 and $1,003,100 as of December 31, 1998 and March 31, 1999. The
likelihood of the exercising of these rescission rights is considered to be
remote, and therefore, interest has not been accrued and included as an
additional liability amount. But the interest is considered to be a contingent
liability of the Company and based on a 10% annual interest rate, amounts to
approximately $98,000 as of December 31, 1997, $197,000 as of December 31, 1998
and $223,000 as of March 31, 1999. When the rescission rights expire, the
respective amounts will be reclassified as permanent equity.

F-22
<PAGE> 46

APPENDIX A

SELLING SECURITY HOLDERS

APPENDIX A-1

<TABLE>
<CAPTION>
COMMON STOCK
- -----------------------------------------------------------------------------------------------------
BENEFICIAL OWNERSHIP MAXIMUM
SELLING SECURITYHOLDER PRIOR TO OFFERING AMOUNT TO BE SOLD
- ----------------------------------------------------------- -------------------- -----------------
<S> <C> <C>
Harry E. Abel.............................................. 3,000 3,000
Raymond Abrams............................................. 2,000 2,000
Edward & Milred Adelman.................................... 2,000 2,000
Farrell E. Aderholt, Jr. .................................. 5,500 5,500
Jonathan A. Ahrens......................................... 4,188 4,188
Dante Alberi............................................... 350,000 350,000
Peter B. Allen............................................. 100,000 100,000
Frank & Julie Amaral....................................... 2,400 2,400
Ameritrade................................................. 2,300 2,300
Andy & Cha-oom Ampie....................................... 5,000 5,000
Henry R. Anderson, Jr. .................................... 2,000 2,000
George Andeloudakis........................................ 5,000 5,000
Sam Angelo................................................. 4,000 4,000
John G. Anselmo............................................ 4,000 4,000
Robert Anthony............................................. 6,000 6,000
Edgar Arvelo............................................... 32,500 32,500
Chester & Ruth Badgett..................................... 4,000 4,000
Bant Enterprises, Inc. .................................... 6,000 6,000
Elmer A. Barce............................................. 1,000 1,000
Darlene Calzon Barror...................................... 1,000,000 1,000,000
Dovie Bass................................................. 2,500 2,500
Marc Bear.................................................. 18,000 18,000
Marcus Barth............................................... 1,000 1,000
Alex Bekanich.............................................. 1,000 1,000
Plummer (deceased) & Marilyn Bell.......................... 27,000 27,000
Lily A. Bennett............................................ 500 500
Carl Bensen................................................ 2,000 2,000
Robert Benson.............................................. 4,000 4,000
John Bevell................................................ 1,000 1,000
BHC Securities, Inc. ...................................... 1,500 1,500
John & Diane Batcha........................................ 5,000 5,000
Brad H. Bienvenu........................................... 10,000 10,000
Anthony Blandi............................................. 2,500 2,500
Herbert Bloomenthol........................................ 2,500 2,500
John P. Boghosian.......................................... 3,000 3,000
Karon & Aimee Bondy........................................ 3,300 3,300
Domenic Borello............................................ 700,000 700,000
Jon Bottone................................................ 13,500 13,500
Michael Brown.............................................. 400 400
Peter A. Boudreau.......................................... 2,500 2,500
Joseph Boyan............................................... 2,000 2,000
John L. Brine.............................................. 1,500 1,500
Don Brown & Lavon Ellerman................................. 600 600
Joseph Burkhart............................................ 4,000 4,000
Wesley L. Burchardt........................................ 27,000 27,000
David A. Buffkin........................................... 6,000 6,000
Russell & Roselyn Burrell.................................. 2,000 2,000
Ronald R. Bussetti......................................... 422,000 422,000
</TABLE>
<PAGE> 48

<TABLE>
<CAPTION>
COMMON STOCK
- -----------------------------------------------------------------------------------------------------
BENEFICIAL OWNERSHIP MAXIMUM
SELLING SECURITYHOLDER PRIOR TO OFFERING AMOUNT TO BE SOLD
- ----------------------------------------------------------- -------------------- -----------------
<S> <C> <C>
Butcher & Singer, Inc. .................................... 1,500 1,500
Rex & Joyce Butler......................................... 2,000 2,000
Joseph M. Campbell......................................... 6,000 6,000
Lisa S. Carlton............................................ 1,500 1,500
Joanne Carature............................................ 1,000 1,000
Anthony Carfagno........................................... 50,000 50,000
Mindy A. Carr (custodian).................................. 100 100
Dan & Linda Cashman........................................ 4,000 4,000
Cash Unlimited............................................. 300,000 300,000
Noel A. Casiroghi.......................................... 5,000 5,000
Carrucci Family Partners................................... 89,900 89,900
William D. Cattucci........................................ 10,000 10,000
Cede & Company............................................. 832,500 832,500
Ed Cheetham................................................ 10,000 10,000
Marie Chevas............................................... 10,000 10,000
* Donna B. Churchill....................................... 500 500
* Greg Churchill........................................... 10,000 10,000
* John A. Churchill, Jr. .................................. 1,142,400 1,142,400
* John G. Churchill........................................ 500 500
* Lindsey B. Churchill..................................... 500 500
* Steven N. Churchill...................................... 500 500
William Cianelli........................................... 20,000 20,000
Arthur Ciccone............................................. 5,000 5,000
James M. Clancy............................................ 15,000 15,000
Lena Clancy................................................ 100,000 100,000
Scott Clemens.............................................. 12,000 12,000
Brian Clark................................................ 1,600 1,600
Henry & Christine Coleman.................................. 1,000 1,000
Celeste Como............................................... 8,000 8,000
Jennifer Como.............................................. 16,000 16,000
Ronald A. Como............................................. 50,000 50,000
Richard Cornell............................................ 1,500 1,500
Gabrial P. Costenzo........................................ 2,700 2,700
* Courchaine Family Partnership............................ 153,400 153,400
* James & Doris Courchaine................................. 10,000 10,000
* James W. Courchaine...................................... 126,000 126,000
Charles & Kathleen Crano................................... 700 700
John C. Cummings........................................... 10,000 10,000
D & D Auto Sales........................................... 1,101,000 1,101,000
Mary Dabal................................................. 6,000 6,000
Leo Darian................................................. 4,000 4,000
Wayne Daughtridge.......................................... 48,000 48,000
Randy DeFazio.............................................. 1,000 1,000
Harold & Martha Dellerman.................................. 3,000 3,000
Phillip DeMasco............................................ 7,500 7,500
Phillip J. DeMasco......................................... 5,000 5,000
Phillip L. DeMasco......................................... 7,500 7,500
Arthur Denfield............................................ 3,000 3,000
</TABLE>

<TABLE>
<S> <C> <C>
- ---------------
* Director or executive officer or affiliate or associate thereof.
</TABLE>
<PAGE> 49
<TABLE>
<CAPTION>
COMMON STOCK
- -----------------------------------------------------------------------------------------------------
BENEFICIAL OWNERSHIP MAXIMUM
SELLING SECURITYHOLDER PRIOR TO OFFERING AMOUNT TO BE SOLD
- ----------------------------------------------------------- -------------------- -----------------
<S> <C> <C>
August Dennis.............................................. 2,000 2,000
Isabel Rita Dennis......................................... 25,000 25,000
Olivia Dergis & J.C. Worthington........................... 1,000 1,000
Neil & Sonal Desai......................................... 10,000 10,000
Barbara Deveronica......................................... 700 700
Rose DiFabio............................................... 2,700 2,700
Dimitri Dimitri............................................ 5,000 5,000
Joe Distefano.............................................. 25,000 25,000
Francisca Y. Donahue....................................... 1,000 1,000
William M. Donahue......................................... 1,000 1,000
Chic Donchin............................................... 2,000 2,000
Alison & Beth Donovan...................................... 400 400
Alison Donovan............................................. 4,800 4,800
Michael Dooley............................................. 2,000 2,000
Randell L. Drovdhal........................................ 1,500 1,500
William Drubel............................................. 25,000 25,000
Ralph Drum................................................. 3,000 3,000
James & Janet Dunn......................................... 15,000 15,000
Charles & Helen Dustin..................................... 1,000 1,000
Sherry Eden................................................ 250 250
James Edmonson............................................. 7,000 7,000
A. G. Edwards, Inc. ....................................... 24,000 24,000
Leonard & Rosemarie Eichhorn............................... 200 200
Robert F. Ely.............................................. 2,000 2,000
Frances G. Emerson......................................... 3,000 3,000
David & Janet Engel........................................ 2,500 2,500
Orvill K. England.......................................... 1,300 1,300
Douglas H. Erbeck.......................................... 1,800 1,800
James C. Etheridge......................................... 24,000 24,000
Harry & Theresa Evans...................................... 1,000 1,000
E.D. Fagan & J.C. Worthington.............................. 50,000 50,000
E.D. Fagan & J.C. Worthington.............................. 100,000 100,000
* von Falconbourg Family Trust............................. 401,277 401,277
Phyllis & Joe Farenkamm.................................... 60,000 60,000
John Farrell............................................... 1,500 1,500
* Genevieve H. Faw......................................... 925,000 925,000
* Larry D. Faw............................................. 395,000 395,000
* Larry D. Faw, Incorporated............................... 2,870,000 2,870,000
Bernard Filiac............................................. 10,000 10,000
Financial Clearing Services................................ 15,900 15,900
Glen Fitzpatrick (custodian)............................... 2,000 2,000
Fitzgerald DeArman & Roberts............................... 5,000 5,000
Paul Flinn................................................. 3,500 3,500
* Charles H. Flood......................................... 30,000 30,000
Anthony Formisaro.......................................... 4,000 4,000
Ralph Forte................................................ 300,000 300,000
Russell & Donna Foster..................................... 4,000 4,000
Kenneth M. Fournie......................................... 1,200 1,200
</TABLE>

<TABLE>
<S> <C> <C>
- ---------------
* Director or executive officer or affiliate or associate thereof.
</TABLE>
<PAGE> 50
<TABLE>
<CAPTION>
COMMON STOCK
- -----------------------------------------------------------------------------------------------------
BENEFICIAL OWNERSHIP MAXIMUM
SELLING SECURITYHOLDER PRIOR TO OFFERING AMOUNT TO BE SOLD
- ----------------------------------------------------------- -------------------- -----------------
<S> <C> <C>
William R. Freund.......................................... 5,000 5,000
Sandra Gallman............................................. 1,000,000 1,000,000
Rene Gandelman............................................. 2,000 2,000
Carlos Garcia.............................................. 25,000 25,000
Gilbert Garcia............................................. 2,000 2,000
James & Patrice Gauger..................................... 2,000 2,000
Stephanie Gehring.......................................... 1,500 1,500
Jane & Santo Genovese...................................... 1,000 1,000
Vernon G. Gerdes........................................... 7,000 7,000
Mark H. German............................................. 6,000 6,000
Charles Gettig............................................. 2,000 2,000
Williard & Helen Gilkerson................................. 2,000 2,000
John Giovannucci........................................... 250,000 250,000
The Godheim Family Partnership............................. 200 200
Norman Godheim............................................. 4,584 4,584
Jeffrey & Susan Gold....................................... 4,000 4,000
Leon & Evelyn Goldapple.................................... 1,000 1,000
Alan R. Golden............................................. 3,000 3,000
Alan R. Golden............................................. 1,000 1,000
Kathy Gomberg.............................................. 2,000 2,000
Bradley Gompers............................................ 2,000 2,000
Samuel Gompers............................................. 2,000 2,000
Helen Gompers-Foster....................................... 2,000 2,000
Humberto Gonzalez, Jr. .................................... 55,000 55,000
Steve Gonzalez............................................. 912,000 912,000
Joel Goodman............................................... 5,000 5,000
Gordon Development Corp. .................................. 500 500
Emily R. Grande............................................ 1,000 1,000
Timothy Greenwood.......................................... 5,000 5,000
John & Barbara Green....................................... 1,000 1,000
Dorothy Grooms............................................. 2,000 2,000
John Haer.................................................. 6,000 6,000
Kevin & Karen Hand......................................... 1,500 1,500
Joseph & Jeanne Hanes...................................... 2,000 2,000
John C. Hanner............................................. 11,000 11,000
Rita Hansen................................................ 1,000 1,000
Roy Hansen................................................. 2,000 2,000
Donald Harmon.............................................. 2,000 2,000
Jack & Sue Hauser.......................................... 1,500 1,500
William & Jean Hayden...................................... 3,500 3,500
Haywood Securities......................................... 5,000 5,000
Mary I. Hearne............................................. 2,000 2,000
Doris Hefler............................................... 1,000 1,000
Hefler Family Trust........................................ 910,100 910,100
Steve Heidmann............................................. 25,500 25,500
Robert Hood................................................ 3,000 3,000
David & Marion Hooper...................................... 12,000 12,000
Linda Hyer................................................. 500 500
</TABLE>

<TABLE>
<S> <C> <C>
- ---------------
* Director or executive officer or affiliate or associate thereof.
</TABLE>
<PAGE> 51
<TABLE>
<CAPTION>
COMMON STOCK
- -----------------------------------------------------------------------------------------------------
BENEFICIAL OWNERSHIP MAXIMUM
SELLING SECURITYHOLDER PRIOR TO OFFERING AMOUNT TO BE SOLD
- ----------------------------------------------------------- -------------------- -----------------
<S> <C> <C>
Rachelle G. Jacover........................................ 2,000 2,000
Bill James................................................. 1,300 1,300
Bipin & Pratibha Jhaveri................................... 1,000 1,000
Thomas S. Jennings......................................... 8,000 8,000
Kenneth & Elisabeth Jester................................. 15,000 15,000
Timothy Jewett............................................. 3,000 3,000
Josephthal & Company, Inc. ................................ 2,500 2,500
Abdellattif & Hikmat Juma.................................. 6,000 6,000
Mark A. Kasrel............................................. 1,000 1,000
James L. Kaufman........................................... 1,250 1,250
Glen Keller/Trustee........................................ 8,000 8,000
Patrick J. Keenan.......................................... 15,000 15,000
Kenny Family Security Trust................................ 500 500
Kenny Family Security Trust................................ 2,500 2,500
Thomas J. Kinney........................................... 1,000 1,000
Firasat Khan............................................... 4,000 4,000
* Harry B. Knights......................................... 175,000 175,000
* Harry & Elizabeth Knights................................ 6,000 6,000
Benjamin Koester........................................... 3,000 3,000
Walter Kosic............................................... 10,000 10,000
Laurence Krasick........................................... 200 200
Scott Krasick & Abby Bacal................................. 300 300
Kray & Company............................................. 299,000 299,000
Anthony Labarbera.......................................... 1,000 1,000
Beverly Lamar.............................................. 5,000 5,000
Stanley & Loretta Lamble................................... 5,000 5,000
Dori W. Lapp............................................... 4,000 4,000
Anthony Latona............................................. 6,000 6,000
Anthony Latona............................................. 1,000 1,000
Cynthia Laub............................................... 200 200
Mildred & Millicent Lecount................................ 2,500 2,500
Philip Leon................................................ 1,000 1,000
Winnona Lesher............................................. 1,000 1,000
Alan M. Levine............................................. 400,000 400,000
Winifred & Alan Levinson................................... 10,000 10,000
Lexus International, Inc. ................................. 51,100 51,100
Maurice & Gloria Lieber.................................... 1,000 1,000
Diane Limoli............................................... 1,000 1,000
Dorthoy Lindsey............................................ 1,500 1,500
A.G. Little................................................ 1,000 1,000
Michael A. Littman......................................... 6,000 6,000
S. Michael Long............................................ 300 300
Oscar Louik................................................ 3,000 3,000
John & Ruth Lovas.......................................... 500 500
Bill Love G.W. Garrett..................................... 11,000 11,000
Herbert Lubowsky........................................... 15,000 15,000
Joseph Lucmon/J.C. Worthington............................. 1,000 1,000
Amy MacCallum.............................................. 500 500
</TABLE>

<TABLE>
<S> <C> <C>
- ---------------
* Director or executive officer or affiliate or associate thereof.
</TABLE>
<PAGE> 52
<TABLE>
<CAPTION>
COMMON STOCK
- -----------------------------------------------------------------------------------------------------
BENEFICIAL OWNERSHIP MAXIMUM
SELLING SECURITYHOLDER PRIOR TO OFFERING AMOUNT TO BE SOLD
- ----------------------------------------------------------- -------------------- -----------------
<S> <C> <C>
Myra & John Mack........................................... 5,000 5,000
Scott Mann & Mary Mahone................................... 1,500 1,500
George & Frances Markham................................... 2,500 2,500
Harold Markle.............................................. 800 800
Paul E. Martineau.......................................... 2,500 2,500
Steven & Barbara Marz...................................... 2,000 2,000
Andrew D. Marzano.......................................... 2,500 2,500
Juan Martinez.............................................. 11,000 11,000
Larry Matthews............................................. 5,000 5,000
Nena Maybury............................................... 5,500 5,500
Mark J. Mazzone............................................ 2,500 2,500
James McDade............................................... 500 500
James McDade............................................... 1,500 1,500
Robert L. McGee............................................ 140,000 140,000
Michael/Hugh McHugh (deceased)............................. 2,500 2,500
Brad McKinney.............................................. 320 320
Michael J. McKinney........................................ 100 100
Morley G. Melden........................................... 2,000 2,000
Merrill Lynch Pierce Fenner & Smith........................ 32,500 32,500
Jane A. Miller............................................. 2,000 2,000
Mike Mirabelli............................................. 7,000 7,000
Carl Misenheimer........................................... 12,000 12,000
Charlotte & Leroy Molitor.................................. 2,000 2,000
Lisa Moody................................................. 10,000 10,000
Morgan Olmstead Kennedy & Gardner, Inc. ................... 1,300 1,300
Morgan Rothchild Anzo, Inc. ............................... 1,000,000 1,000,000
Raymond & Irene Morse...................................... 1,000 1,000
Olin & Rosemarie Morrison.................................. 3,000 3,000
Dominick & Marie Muggeo.................................... 12,500 12,500
Eugene J. Mullen, Jr. (custodian).......................... 500 500
Nicholas Munger, Esq....................................... 10,000 10,000
Elpidio Pete Munoz......................................... 235,000 135,000
Nicholas Stuart Munson..................................... 10,000 10,000
Grover Hulan Nasworthy, Jr. ............................... 31,000 31,000
Patrica Neenan............................................. 5,000 5,000
Barry F. Neer.............................................. 10,000 10,000
Frank Neer................................................. 10,000 10,000
* Mahrukh Neville.......................................... 5,000 5,000
* Vincent J. Neville....................................... 437,000 437,000
Cynthia Nolan.............................................. 1,000 1,000
Norsedatter Imports, Inc. ................................. 500 500
John P. O'Donnell.......................................... 2,000 2,000
Donald F. O'Neill.......................................... 5,000 5,000
Mark Ornoff................................................ 5,000 5,000
Angiolina & Bob Owens...................................... 3,000 3,000
Celesete Padgett........................................... 10,000 10,000
Mark & Karen Palermo....................................... 27,000 27,000
Gus W. Pappas.............................................. 3,500 3,500
</TABLE>

<TABLE>
<S> <C> <C>
- ---------------
* Director or executive officer or affiliate or associate thereof.
</TABLE>
<PAGE> 53
<TABLE>
<CAPTION>
COMMON STOCK
- -----------------------------------------------------------------------------------------------------
BENEFICIAL OWNERSHIP MAXIMUM
SELLING SECURITYHOLDER PRIOR TO OFFERING AMOUNT TO BE SOLD
- ----------------------------------------------------------- -------------------- -----------------
<S> <C> <C>
Amy Parbury................................................ 5,000 5,000
Wayne A. Parker............................................ 4,000 4,000
James & Bonnie Parsons..................................... 300 300
H. Steven Passion.......................................... 10,000 10,000
Danai & Rawiwarn Pechkam................................... 5,000 5,000
Josephine Pecoraro......................................... 6,000 6,000
Howard Pelkey.............................................. 1,600 1,600
James J. Petroff........................................... 2,000 2,000
Philadep & Company......................................... 20,000 20,000
Donald & Elly Pine......................................... 1,300 1,300
Paul J. Piterski........................................... 15,000 15,000
Pittco..................................................... 4,700 4,700
Janis & Donald Plym........................................ 1,000 1,000
Christopher & Josephine Porter............................. 3,400 3,400
Robert W. Presley.......................................... 50,000 50,000
Ernest & Cherie Previch.................................... 1,500 1,500
Pro-Tech Appliance Service, Inc. .......................... 11,000 11,000
Don & Beverly Quinn........................................ 3,000 3,000
Jeffrey F. Rahrig.......................................... 2,000 2,000
William Raisis............................................. 9,000 9,000
Kathleen Reavey............................................ 500 500
Freda Z. Reeves............................................ 8,000 8,000
Lou Anne Reeves............................................ 1,000 1,000
Tommi Reeves............................................... 1,000 1,000
Tommi & LouAnne Reeves..................................... 500,000 500,000
Refco Securities, Inc. .................................... 3,000 3,000
Regional Clearing Corp. ................................... 40,500 40,500
Jill Ressler............................................... 500 500
Retirement Accounts fbo Howard Dennis...................... 49,000 49,000
Retirement Accounts fbo Charles H. Flood................... 3,000 3,000
Retirement Accounts fbo Charles Grande..................... 38,316 38,316
Retirement Accounts fbo Robert L. McGee.................... 128,962 128,962
Retirement Accounts fbo Thomas L. Rotunno.................. 5,000 5,000
Retirement Accounts fbo Etty Segal......................... 13,834 13,834
Retirement Accounts fbo Israel Segal....................... 49,305 49,305
Retirement Accounts fbo Ross Hagstoc....................... 2,000 2,000
Anna & James Revis......................................... 1,000 1,000
Leo Rice................................................... 2,000 2,000
Ronald & Susan Richardson.................................. 1,500 1,500
* Andrew C. Rigrod......................................... 25,000 25,000
Rimco...................................................... 400 400
Marc Rose.................................................. 10,000 10,000
Armin D. Rosencranz........................................ 12,000 12,000
Seymour & Judith Rosenfield................................ 1,500 1,500
Michael Rossetti........................................... 1,000 1,000
Doug B. Ross............................................... 1,000 1,000
David Rotunno.............................................. 6,000 6,000
Elizabeth Rottuno.......................................... 7,000 7,000
</TABLE>

<TABLE>
<S> <C> <C>
- ---------------
* Director or executive officer or affiliate or associate thereof.
</TABLE>
<PAGE> 54
<TABLE>
<CAPTION>
COMMON STOCK
- -----------------------------------------------------------------------------------------------------
BENEFICIAL OWNERSHIP MAXIMUM
SELLING SECURITYHOLDER PRIOR TO OFFERING AMOUNT TO BE SOLD
- ----------------------------------------------------------- -------------------- -----------------
<S> <C> <C>
Lou Rotunno................................................ 40,500 40,500
Ralph Rotunno.............................................. 2,000 2,000
Thomas Rotunno............................................. 4,500 4,500
Rodney J. Rush............................................. 60,000 60,000
Frank & Anne Russo......................................... 12,500 12,500
Leslie & Frank Orlando..................................... 1,300 1,300
J.T. Scanlon & Philip Carroll.............................. 6,000 6,000
Joseph Scaturro............................................ 2,000 2,000
Odell Sassnett & Laura Sassnett-Furey...................... 24,000 24,000
Henry G. Scheuring......................................... 112,000 112,000
Allen & Jacklyn Schmetzer.................................. 1,000 1,000
Warren C Schmidt........................................... 1,000 1,000
W. J. Schroeder............................................ 1,000 1,000
Scinta Enterprises, Inc. .................................. 1,200 1,200
Scottsdale Securities, Inc. ............................... 1,000 1,000
Gilbert Scwwarting......................................... 2,000 2,000
Sector II Corporation...................................... 92,300 92,300
Alan T. Sedgwick........................................... 4,000 4,000
Harriet N. Segal........................................... 4,000 4,000
Roger P. Selle............................................. 2,000 2,000
Edna Shields............................................... 500 500
Sho Shiraga................................................ 1,000 1,000
Marc J. Shuman............................................. 6,000 6,000
William B. Silverman....................................... 3,000 3,000
Samual & Elizabeth Simcox.................................. 2,000 2,000
Carl Sims.................................................. 1,200 1,200
Boreen Sisolak............................................. 5,000 5,000
Smith Barney, Inc. ........................................ 30,000 30,000
Dallas Smith............................................... 13,000 13,000
Eugene F. Smith............................................ 500,000 500,000
George Smith............................................... 3,000 3,000
Stephen & Harold Solin..................................... 1,500 1,500
John Sosinski.............................................. 3,300 3,300
Edwin & Blanch Sossong..................................... 10,000 10,000
Spear Leeds & Kellogg...................................... 500 500
* Wallis M. Spence......................................... 25,000 25,000
Frank & Jeannette Spiegel.................................. 5,000 5,000
Fredrick Spriggs........................................... 301,158 301,158
Susan Stanton.............................................. 1,500 1,500
Donna Stacy & Travis Vonderhaar............................ 1,000 1,000
Alvin Starke............................................... 2,000 2,000
Thomas H. Steele........................................... 4,000 4,000
Harry Stevenson............................................ 2,500 2,500
John T. Stone.............................................. 5,000 5,000
Gary Stratton.............................................. 12,000 12,000
Bernard C. Stritt.......................................... 600,000 600,000
Kurt & Pam Stumpferrnagel.................................. 2,000 2,000
Stutz Motor Car of America................................. 125,000 125,000
</TABLE>

<TABLE>
<S> <C> <C>
- ---------------
* Director or executive officer or affiliate or associate thereof.
</TABLE>
<PAGE> 55
<TABLE>
<CAPTION>
COMMON STOCK
- -----------------------------------------------------------------------------------------------------
BENEFICIAL OWNERSHIP MAXIMUM
SELLING SECURITYHOLDER PRIOR TO OFFERING AMOUNT TO BE SOLD
- ----------------------------------------------------------- -------------------- -----------------
<S> <C> <C>
Mickey & Henry Sunier...................................... 3,000 3,000
Richard & Joyce Sutton..................................... 2,500 2,500
Doug & Rose Swierczynski................................... 4,000 4,000
Raymond Szulc.............................................. 5,000 5,000
John & Rose Taddeo......................................... 6,000 6,000
Thomas (deceased) & Misaye Tanabe.......................... 23,000 23,000
Thomas Tausig.............................................. 10,000 10,000
Phillip J. Testa........................................... 1,001,000 1,001,000
Jean Thomas................................................ 17,000 17,000
Urias & Bessie Thomas...................................... 7,500 7,500
Robert & Barbara Thrun..................................... 200 200
John & Mary Jo Thurston.................................... 1,000 1,000
Willie & Barbara Tia....................................... 6,000 6,000
Daryl M. Tirico............................................ 80,000 80,000
Andrew Toliver............................................. 1,000 1,000
Ken Torgerson.............................................. 25,000 25,000
John Toth.................................................. 100,000 100,000
Lovie Trice................................................ 1,500 1,500
Ruth Trudeau............................................... 2,000 2,000
Mike Uttley................................................ 1,300 1,300
Kenneth Vance.............................................. 520 520
Carl Vancuren.............................................. 1,000 1,000
Manuel Vela, Jr. .......................................... 16,000 16,000
Ron Vonderhaar............................................. 2,000 2,000
Gail Waldinger............................................. 2,000 2,000
Jeanette M. Walker......................................... 7,500 7,500
Wall Street Clearing/BT Alex Brown......................... 100 100
Bruce D. Waldron........................................... 500 500
Katsuo Watanabe............................................ 7,500 7,500
David & Lola Webster, III.................................. 6,000 6,000
David Weideman............................................. 1,000 1,000
Michael Wells.............................................. 2,000 2,000
Gene & Millie Wendler...................................... 10,000 10,000
Courtney P. Wendt.......................................... 2,000 2,000
Sheila Wessner............................................. 700 700
David West................................................. 500 500
* Walter Johnson Williams.................................. 526,000 526,000
Charles N. Wilkinson....................................... 2,500 2,500
Thomas F. Williamson....................................... 800 800
Mary B. Wolfram............................................ 2,000 2,000
Rebecca L. Womble.......................................... 1,400 1,400
King Wong.................................................. 1,000 1,000
Elliott Wooton............................................. 3,000 3,000
George & Edwina Worsley.................................... 50,371 50,371
John C. Worthington........................................ 351,000 351,000
James Yaboni............................................... 5,000 5,000
Bradford Yoder............................................. 2,000 2,000
Ted Yong................................................... 20,000 20,000
</TABLE>

<TABLE>
<S> <C> <C>
- ---------------
* Director or executive officer or affiliate or associate thereof.
</TABLE>
<PAGE> 56
<TABLE>
<CAPTION>
COMMON STOCK
- -----------------------------------------------------------------------------------------------------
BENEFICIAL OWNERSHIP MAXIMUM
SELLING SECURITYHOLDER PRIOR TO OFFERING AMOUNT TO BE SOLD
- ----------------------------------------------------------- -------------------- -----------------
<S> <C> <C>
Elmer J. Zorn.............................................. 50,000 50,000
---------- ----------
Total................................................. 31,282,001 31,282,001
========== ==========
</TABLE>

- ---------------
* Director or executive officer or affiliate or associate thereof.
<PAGE> 57

APPENDIX A-2

<TABLE>
<CAPTION>
CLASS B PREFERRED STOCK
- -----------------------------------------------------------------------------------------------------
BENEFICIAL OWNERSHIP MAXIMUM
SELLING SECURITYHOLDER PRIOR TO OFFERING AMOUNT TO BE SOLD
- ----------------------------------------------------------- -------------------- -----------------
<S> <C> <C>
Jonathon A. Ahrens......................................... 419 419
Dante J. Alberi............................................ 15,000 15,000
Carter E. Allman........................................... 300 300
Willie & Yvonne Baker...................................... 500 500
John & Josephine Batcha.................................... 1,000 1,000
Domenic Borello............................................ 40,000 40,000
John Bottome............................................... 300 300
Peter & Thersea Calligandes................................ 50 50
Patrick J. Campbell........................................ 30 30
John D. Carlos............................................. 200 200
Dan & Linda Cashman........................................ 700 700
Chaffin Trust.............................................. 170 170
Walter & Ester Chapman..................................... 1,000 1,000
George Clanton............................................. 9,500 9,500
U.S. Clearing.............................................. 4,495 4,495
Celeste Como............................................... 200 200
Jennifer Como.............................................. 400 400
Ronald A. Como............................................. 1,000 1,000
David & Michelle Copeland.................................. 1,500 1,500
* Doris & James W. Courchaine.............................. 25,000 25,000
D.L. & Juanita Cremeen..................................... 300 300
Juanita Cremeen............................................ 300 300
Mary Dabal................................................. 600 600
Dean Witter Reynolds, Inc. ................................ 500 500
Tom Delaney................................................ 250 250
Patrick & Dolores Demasco.................................. 250 250
William H. Drubel, Jr. .................................... 7,600 7,600
James E. Edmonson.......................................... 200 200
Douglas Erbeck............................................. 170 170
Harry & Theresa Evans...................................... 40 40
* Geneiveve H. Faw......................................... 300,000 300,000
* Larry D. Faw............................................. 1,000,000 1,000,000
* von Falconbourg Family Trust............................. 1,000,000 1,000,000
Charles H. Flood........................................... 2,000 2,000
Ralph Forte................................................ 5,000 5,000
Stephanie Gehring.......................................... 150 150
J. W. Giovannucci.......................................... 10,000 10,000
Godheim Family Partnership................................. 160,520 160,520
C. Bradley Gompers......................................... 200 200
Samuel L. Gompers.......................................... 200 200
Helen Gompers-Foster....................................... 200 200
Steve Gonzalez............................................. 30,000 30,000
Elenor & David Govoni...................................... 300 300
Emily R. Grande............................................ 500 500
John & Barbara Green....................................... 100 100
Hefler Family Trust........................................ 300,000 300,000
</TABLE>

- ---------------
* Director or executive officer or affiliate or associate thereof.
<PAGE> 58
<TABLE>
<CAPTION>
CLASS B PREFERRED STOCK
- -----------------------------------------------------------------------------------------------------
BENEFICIAL OWNERSHIP MAXIMUM
SELLING SECURITYHOLDER PRIOR TO OFFERING AMOUNT TO BE SOLD
- ----------------------------------------------------------- -------------------- -----------------
<S> <C> <C>
William C. Hoegler......................................... 6,000 6,000
William C. Hueston......................................... 100 100
Rachelle Jacover........................................... 200 200
Janney Montgomery Scott, Inc. ............................. 140 140
Abdellattif & Hikmat Juma.................................. 600 600
Patrick Keenan............................................. 1,500 1,500
* Harry B. Knights......................................... 35,000 35,000
Anthony Labarbera.......................................... 500 500
Jack Laramore.............................................. 100 100
Larko...................................................... 500 500
Anthony Latona............................................. 1,800 1,800
Lehman Brothers, Inc. ..................................... 2,500 2,500
Alan M. Levine............................................. 10,000 10,000
Robert & Patricia Lomas.................................... 300 300
S. Michael Long............................................ 130 130
Lundgren & McCorrison...................................... 90 90
Lundrew & McCorrison....................................... 90 90
Harold Markle.............................................. 120 120
Joe Maselli................................................ 300 300
Mike Mirabelli............................................. 300 300
Olin & Rosemarie Morrison.................................. 200 200
National Investor Services................................. 1,000 1,000
* Vincent J. Neville....................................... 60,000 60,000
Yoshiro & Sueko Oishi...................................... 450 450
Olivia Ortega.............................................. 100 100
John & Victoria Ortenzi.................................... 400 400
Russell V. Panchelli....................................... 250 250
James & Bonnie Parsons..................................... 30 30
Leo & Lois Paul............................................ 300 300
Paul J. Piterski........................................... 500 500
Leonard Platnick........................................... 50 50
Janis & Donald Plym........................................ 100 100
RAF Financial Corp. ....................................... 3,380 3,380
Kathleen Reavey............................................ 200 200
Tommi & Lou Anne Reeves.................................... 50,000 50,000
Elizabeth Rotunno.......................................... 700 700
Lou Rotunno................................................ 10,000 10,000
Ralph & Patricia Rotunno................................... 200 200
Thomas Rotunno, Sr. ....................................... 1,000 1,000
Dale E. Rue................................................ 130 130
Rodney J. Rush............................................. 1,000 1,000
Joseph Scaturro............................................ 200 200
Henry G. Scheuring......................................... 113,800 113,800
Warren C. Schmidt.......................................... 330 330
Sector II Corporation...................................... 9,230 9,230
Harriet N. Segal........................................... 300 300
Dennis Smith............................................... 250 250
Stephen & Harold Solin..................................... 100 100
</TABLE>

<TABLE>
<S> <C> <C>
- ---------------
* Director or executive officer or affiliate or associate thereof.
</TABLE>
<PAGE> 59
<TABLE>
<CAPTION>
CLASS B PREFERRED STOCK
- -----------------------------------------------------------------------------------------------------
BENEFICIAL OWNERSHIP MAXIMUM
SELLING SECURITYHOLDER PRIOR TO OFFERING AMOUNT TO BE SOLD
- ----------------------------------------------------------- -------------------- -----------------
<S> <C> <C>
Fredrick Spriggs........................................... 80,000 80,000
Thomas H. Steele........................................... 300 300
Bernard C. Stritt.......................................... 50,000 50,000
Kurt & Pam Stumpfernagel................................... 19,800 19,800
Richard & Ellen Stupak..................................... 100 100
Phillip J. Testa........................................... 200,000 200,000
Robert & Josephine Tomasulo................................ 200 200
Kenneth H. Vance........................................... 20 20
Mauel Vela, Jr. ........................................... 1,000 1,000
Wall Street Clrg/BT Alex Brown............................. 3,100 3,100
William L. Whitacre........................................ 1,000 1,000
Tim Wickman................................................ 100 100
* Walter Johnson Williams.................................. 250,000 250,000
Mary B. Wolfram............................................ 200 200
John C. Worthington........................................ 10,000 10,000
</TABLE>

<TABLE>
<S> <C> <C>
- ---------------
* Director or executive officer or affiliate or associate thereof.
</TABLE>